Date
28 July 2017
HSBC did not say which clients would be affected by the policy change beyond noting some Chinese nationals would be affected. Photo: Bloomberg
HSBC did not say which clients would be affected by the policy change beyond noting some Chinese nationals would be affected. Photo: Bloomberg

HSBC curbs US property loans to Chinese citizens

HSBC Holdings Plc (00005.HK) will no longer provide mortgages to some Chinese nationals who buy real estate in the United States.

The policy change came amid Beijing’s efforts to stem the outflow of capital from the country.

An HSBC spokesman in New York told Reuters on Wednesday that the new policy went into effect last week, roughly a month after China suspended Standard Chartered Plc (02888.HK) and DBS Group Holdings Ltd. from conducting some foreign exchange business.

China’s stock market slump, slowing economic growth and weak real estate prices have prompted Chinese individuals and companies to try to shift money offshore for higher returns.

But this has created problems for Beijing as capital outflows undermine efforts to prop up the renminbi and domestic investment, the news agency said.

In the US, real estate agents and regulators say Chinese buyers often prefer to buy property in cash and they are the biggest foreign buyer.

Chinese buyers bought US$28.6 billion of property in the US last year, up from US$22 billion in 2014, according to data from the National Association of Realtors.

HSBC declined to clarify which clients would be affected by the change beyond describing the policy as impacting some Chinese nationals.

Luxury homes news website Mansion Global, which first reported the HSBC policy change, said it would affect Chinese nationals holding temporary visitor “B” visas if the majority of their income and assets are maintained in China.

In Vancouver, an HSBC spokeswoman said HSBC’s Canadian arm already had similar policies in place and was actively reviewing those policies in the context of the local regulatory environment to determine if and what changes are necessary.

China’s State Administration of Foreign Exchange said late last year it would soon launch a system to monitor foreign exchange businesses at banks and put people who tried to buy more foreign currency than is allowed on a watch list.

Those found trying to purchase more than the maximum US$50,000 in foreign currency a year would be placed on a watch list, it said.

“HSBC fully complies with all applicable regulations in the markets in which it operates and constantly reviews its policies to protect its customers and support the orderly and transparent operation of financial markets,” the London-based bank said in a statement.

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FL/CG

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