A growing number of mainland Chinese financial institutions and international companies have shown interest in establishing regional headquarters in Hong Kong to tap into increasing business opportunities across the region, according to the head of Citigroup‘s local unit.
Aveline San Pau-len, Citi Hong Kong CEO and head of banking, said many mainland banks and international financial institutions would like Citigroup to help set up their headquarters in the city to serve clients who wanted to expand globally.
“Mainland lenders and Citigroup Hong Kong are not competitors; [rather] we are partners,” San said in a recent exclusive interview with the Post. “We are the bankers of these mainland banks and financial institutions, supporting their business expansion plans into Hong Kong and overseas markets.”
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She said Citigroup “has a physical presence in 94 markets” and that many of its “banking and corporate clients would like us to help them go global, as we have the networks and talent to serve them”.
Many international companies from the US and other regions favour Hong Kong as a gateway to access mainland China and the broader Asian market, according to Citi Hong Kong CEO Aveline San. Photo: Sun Yeung alt=Many international companies from the US and other regions favour Hong Kong as a gateway to access mainland China and the broader Asian market, according to Citi Hong Kong CEO Aveline San. Photo: Sun Yeung>
As an international financial centre, Hong Kong was an ideal springboard for many mainland financial institutions, fintechstart-ups and various companies to expand into other markets, according to San.
Attracting more mainland and international financial institutions to set up regional headquarters in Hong Kong was one of the key measures unveiled by Chief Executive John Lee Ka-chiu in his policy address last month.
Currently, 15 of the 29 globally important banks have regional headquarters in the city, according to the Hong Kong Monetary Authority.
The Hong Kong government had introduced many measures, like tax benefits, to support mainland firms in setting up corporate treasury centres in the city. Active capital markets in the city also allowed these companies to raise funds through shares or bonds, San said.
Geopolitical tension in recent years has led many international firms to diversify their supply chains, production lines and markets, according to Tom Chan Pak-lam, the permanent honorary president of the Institute of Securities Dealers, an industry body. “Hong Kong is a safe haven for these companies to expand into mainland China or other Asian markets,” Chan said.
Against that backdrop, Citigroup’s Hong Kong corporate clients seeking to expand into Latin America or other Asian markets could leverage the group’s units in those regions, as they possessed the local knowledge and networks needed to support their growth, San said.
Many international companies from the US and other regions also favoured Hong Kong as a gateway to access the mainland and the broader Asian market, she added.
Aveline San, Citi Hong Kong CEO and head of banking. Photo: Edmond So alt=Aveline San, Citi Hong Kong CEO and head of banking. Photo: Edmond So>
After these companies set up their regional headquarters in Hong Kong, San pointed out that the next step would be for their owners to capitalise on the city’s wealth management expertise.
“Instead of investing in a single asset class or market, our clients are increasingly looking for international diversification,” she said.
Income earned from the Hong Kong units of mainland firms could be invested internationally through capital market platforms in Hong Kong, she said, noting that the city had a wide range of stocks, bonds and foreign exchange products.
“The many measures introduced by the Hong Kong government in recent years to attract family offices to set up here, alongside the many measures to promote new listings and wealth management services, [have made] the city more attractive to these wealthy international and mainland clients,” she said.
Family offices are entities established by affluent families to manage their succession plans, investments and charitable endeavours. Since 2023, the government has introduced tax benefits, as well as an investment migration scheme, to attract wealthy families to set up their offices in the city.
The active stock and bond markets have also attracted wealthy clients to invest here, San said. The average daily trading volume of the stock market jumped 132 per cent year on year to HK$248.3 billion (US$31.9 billion) in the first eight months of 2025.
Some 66 companies had raised US$23.27 billion through new listings on the exchange’s main board in the first nine months of this year, according to data from the London Stock Exchange Group. The Hong Kong stock exchange is on course to regain the initial public offering crown this year, a title it last held in 2019 before social unrest and the pandemic took a toll on the market.
The challenge ahead would be in developing and recruiting talent, according to San.
“The government has done a lot on education, but there is always more to do to train local talent – in areas such as green finance, fintech, digital assets and artificial intelligence – to serve these companies and banks,” she said. “We see opportunities for Hong Kong to lead the way in fostering an AI-ready workforce.”
A “low-rate honeymoon” for Hong Kong borrowers has come to an end with an increase in the interest rate banks use to set loan prices, a mixed blessing that drives away carry traders but threatens a property market recovery and discourages corporate borrowing, according to analysts.
The Hong Kong Monetary Authority intervened 12 times in the currency market over the past two months, successfully defending the local currency’s peg to the US dollar by buying HK$119.95 billion and selling US$15.28 billion between June 25 and August 13.
However, these interventions mopped up excess liquidity in the banking sector, prodding up the Hong Kong interbank offered rate (Hibor), which will put more pressure on borrowers whose loans are based on the rate.
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“The higher Hibor rate will definitely have a negative impact on the investment market and property trading,” said independent analyst Jasper Lo.
Hong Kong’s currency has been pegged to the US dollar since 1983 at a fixed exchange rate of HK$7.80 per US dollar. In 2005, the HKMA established a narrow trading band, allowing the Hong Kong dollar to fluctuate between HK$7.75 and HK$7.85. When the local currency’s exchange rate nears either end of that range, the HKMA buys or sells currency to alter the supply-demand equation and reel it back in.
The HKMA’s 12 recent interventions reduced the aggregate balance, a measure of banking-sector liquidity, by 69 per cent to HK$53.72 billion as of August 14 from a recent peak of HK$174 billion in May.
As a result, the overnight Hibor hit 2.7678 per cent on Friday, compared with 0.1770 per cent on August 13. The one-month Hibor, which is used to price mortgage loans, rose to 2.7706 per cent from 0.9103 per cent during the same period, while the three-month Hibor used for corporate loans rose to 2.8373 per cent from 1.6063 per cent.
The immediate impact of the higher Hibor is narrowing the interest-rate gap between the US and Hong Kong to about 1.56 percentage points on Friday, compared with more than 4 percentage points from May to mid-August.
The Hong Kong Monetary Authority logo is seen in IFC Two in Central. Photo: Jonathan Wong alt=The Hong Kong Monetary Authority logo is seen in IFC Two in Central. Photo: Jonathan Wong>
The wide gap from May triggered carry trades, where investors borrow in low-interest currencies to invest in higher-yielding assets, which pushed the Hong Kong dollar to the weak end of its peg and triggered the HKMA interventions.
“The room for carry trade is now trimming,” said Samuel Tse, a senior economist and strategist at DBS Bank in Hong Kong.
The Hong Kong dollar strengthened to HK$7.7936 on Tuesday, the highest since mid-May. It was trading at HK$7.8172 on Friday.
With the higher Hibor, homeowners with loans pegged to that rate will feel the most pain: HK$4,418 (US$566) more per month as the monthly payment increases to HK$22,452 on a HK$5 million, 30-year mortgage priced at Hibor plus 1.3 per cent, according to local mortgage broker mReferral.
That figure represents a jump of nearly 25 per cent in monthly payment, based on Friday’s mortgage rate of 3.5 per cent and a repayment of HK$18,034 on June 17, when the rate was 1.82 per cent.
Property developers and owners selling lived-in flats benefited as borrowers enjoyed three months of relatively low mortgage costs from May, when the Hibor hovered near a three-year low of 0.5 per cent, according to Eric Tso Tak-ming, chief vice-president of mReferral.
“Now the low-rate honeymoon period is over,” he said. “With the rising Hibor rates, prospective homebuyers may choose to monitor market trends and interest-rate movements before making a purchase decision.”
Tso said the higher Hibor would increase funding costs for the capital and property markets, but the impact could be manageable as the US may cut interest rates soon.
The overnight and one-month Hibor rates were likely to stay at around 3 per cent to 4 per cent in the near future, which would deter carry traders, Lo said.
The city’s strong stock market and many popular initial public offerings recently had led to strong demand for the Hong Kong dollar, which would keep the Hibor between 2 per cent and 3 per cent, said Tommy Ong, managing director of T.O. & Associates Consultancy.
If the US Federal Reserve cut interest rates, the Hibor would decline and local commercial banks would soon lower their prime lending rates, Lo said.
However, Bank of East Asia (BEA) co-CEO Adrian Li Man-kiu said commercial banks could choose not to reduce their prime rates, even though BEA expected the US to cut its key rate by 50 basis points by the end of this year.
“The saving rate is very low at the moment, so it is hard to get much lower, and hence it would be hard to cut the prime rate lower,” Li said at the bank’s results briefing on Thursday.
Hong Kong’s commercial banks trimmed their prime rate three times from September to December by a combined 62.5 basis points to 5.25 per cent or 5.5 per cent, while cutting their savings rate by the same margin to 0.25 per cent.
Ryan Lam Chun-wang, head of research for Hong Kong at Shanghai Commercial Bank, said the US would have two 25-basis-point cuts this year, accompanied by two 12.5-basis-point cuts in the Hong Kong dollar prime rate. The Hibor would stay above 2 per cent, he added.
If Hong Kong lenders were to cut the prime rate by 12.5 basis points twice, the rate would drop to a historic low of 5 per cent, and the savings rate would drop to zero.
