A general view shows residential and commercial buildings next to Victoria Harbour, as seen from Hong Kong Island on May 11, 2021. (ANTHONY WALLACE / AFP)

The possible expansion of the Cross-boundary Wealth Management Connect Scheme to include brokerages, as reported by Bloomberg News, will bring long-term benefits to Hong Kong’s financial institutions, a financial industry veteran said.

“Hong Kong is an established international financial center and is able to offer a wider range of investment products than the Chinese mainland,” Paul McSheaffrey, KPMG's China partner for financial services, told China Daily. “When those products are open to residents in the Guangdong-Hong Kong-Macao Greater Bay Area, we should see real benefit to all participating institutions in Hong Kong.”

Hong Kong is an established international financial center and is able to offer a wider range of investment products than the Chinese mainland. When those products are open to residents in the Guangdong-Hong Kong-Macao Greater Bay Area, we should see real benefit to all participating institutions in Hong Kong.  

Paul McSheaffrey, KPMG's China partner for financial services

Hong Kong’s Securities and Futures Commission has given an in-principle green light to expand the wealth management connect program to hundreds of licensed brokerages in the city, subject to applications and other requirements, according to the report by Bloomberg last week, citing people familiar with the matter. The cross- boundary program currently is limited to banks.

The SFC declined to comment on the issue.

READ MORE: HK scales new heights

The current wealth management connect program is still limited in terms of its size and investment products that are eligible, McSheaffrey said.

“We see that this will really take off when the program expands,” he said, adding that all participating brokerages will benefit from the move.

“The first step is establishing the operational processes and starting to build their customer base. In that regard, the SFC’s in-principle announcement is a positive step.”

Officially launched last year, the program allows for cross-boundary investments in the Greater Bay Area, which has a population of 86 million. It enables residents in Hong Kong, Macao, and nine cities in Guangdong province to carry out cross-boundary investments in wealth management products in the area. A total of 24 eligible banks in Hong Kong, including Citi Hong Kong, got the approval to offer related services as of Jan 27.

As one of the major wealth management centers in the world, the size of assets under management (AUMs) in Hong Kong amounted to HK$34.9 trillion ($4.46 trillion) as of the end of 2020, representing a 21 percent year-on-year growth, according to a survey published by the SFC.

The large potential arising from the Greater Bay Area’s wealth management business is enticing more foreign banks to expand its business in Hong Kong, industry observers say.

“With the launch of the Wealth Management Connect last year and various Greater Bay Area initiatives on the horizon, opportunities are strong for further client-led growth in Hong Kong wealth management,” Citibank told China Daily.

ALSO READ: WMC pilot scheme sees $20.5m in remittance flows

The US bank plans to triple its wealth client number and double its AUMs in Hong Kong by 2025. To achieve that, it announced last year that it will increase its employees by more than 1,000 across its wealth management business in the city, including over 550 relationship managers and private bankers in the next five years.

For commercial banking business, meanwhile, the lender announced earlier this month that it will hire almost 350 people in the Asia-Pacific region in a move to accelerate growth globally. About one-third will be hired in Hong Kong, the second-largest market by revenue for the company’s commercial banking business after the United States.

tianyuanzhang@chinadailyhk.com