A surge in demand for overseas investments due to local market and currency weakness has prompted many Chinese savers to move their money outside China.
Hong Kong-listed Standard Chartered, a central foreign exchange bank, has suspended new investments by its clients in China into offshore products via a quota-based channel, the bank said on Monday. The Asia-focused bank cited “commercial reasons” for the move but did not elaborate.
It comes after a $700 million writedown on its stake in Bohai Bank and as it faces further loan losses from its China property business. The company, which makes about 90 percent of its profit in Asia, also booked a non-recurring tax charge in South Korea and warned of continuing pressure from anti-money laundering rules.
Regulators worldwide have tightened checks on suspicious transactions and are reviewing the ability of banks to differentiate between the genuine and the not-so-genuine. Experts say this has added to the workload of compliance staff, which needs to improve with high false favorable rates and a massive backlog of cases.
Some of the biggest global banks have boosted investment in technology and people to manage these growing responsibilities. But several action groups have called on Britain, which handles much of the world’s cross-border banking, to stop rolling out the red carpet to criminals and reject their attempts to legitimize their wealth with British companies and banks.
HSBC Holdings Plc, Goldman Sachs Group Inc, and JPMorgan Chase & Co have flagged slowing growth in China as the country’s policymakers struggle to arrest a deepening property crisis and weak consumer demand. But other Wall Street firms are still targeting the country as a critical source of profits.
In the latest quarter, a steep drop in emerging-market currencies weighed on revenue from its financial markets division, which is based mainly in Asia. Its income from the unit fell by a low single-digit percentage.
The bank, which has a reputation for doing good work in developing countries, like promoting eye care for children in China and helping people use LED lights in Indonesia, has seen its shares rise this year as investors have welcomed its plans to boost capital return to shareholders. It has kept its guidance for 2024 unchanged, with annual revenue growth seen at 8-10 percent. Its profit rose in the second quarter. The company reported a 2 percent increase in earnings per share to HK$2.90.
