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Business • HKFP Voices

Hong Kong: The worst place in the

world for a startup to open a bank
account?
31 January 2017 14:07 • Guest Contributor • 4 min read

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By Shaun Cunningham

Over the past 12 months, in our efforts to open a business bank account, our Hong Kong startup was rejected by no
less than four banks. Our crime? We were told our business was “too young” for a bank account, which is curious
since startups tend to be fairly young.

Some of the bankers we met apologised, mumbling that it was to do with U.S. regulatory pressure. Others told us that
it wasn’t even worth making an application in the first place. It is worth noting that this is for an applicant that holds a
valid Hong Kong visa, and for a business that had already been trading for six months and was generating high five
figures in monthly revenue.

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Three years ago when I opened a business bank account in the UK, it couldn’t have been more different. I simply
walked into NatWest Bank without an appointment, with a couple of business and proof of identity documents at
hand, and walked out an hour later with the business account application complete. The account was opened by the
end of the same week.

Baffled by the rejection, I contacted InvestHK, the department responsible for helping startups get established in Hong
Kong. They responded with an acknowledgement that it was indeed difficult for startups to open bank accounts in
Hong Kong, and then directed me to this link, which simply had a list of every single bank registered in Hong Kong.

Using a corporate services firm

Frustrated, we paid a corporate services firm. After a couple of weeks. they made an introduction to a bank that I will
refer to as CIT. CIT, like the other banks we had met, required no less than 22 separate documents for our application.
After an interview with a rather patronising relationship manager at the bank, we were then charged for the privilege
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10/15/2017 Hong Kong: The worst place in the world for a startup to open a bank account? | Hong Kong Free Press HKFP

of submitting an account opening application (no guarantee whether the account would open). Two months later and
after multiple interviews, our account is finally open.

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Photo: GovHK.

But by “open”, they simply email you with an account number. That’s it. No instructions, no card, no internet banking,
just an email with a number. It will now take another three months for CIT Bank to process our “internet banking
application”, and in the interim any payments we would like to make will require a full page document being filled
out, signed and stamped with a “company chop” (don’t ask), then emailed to a relationship manager, who will then
call us to authorise the payment. We typically make up to 10 payments a day, which means that every day we will
need to fill out, sign and chop 10 pages worth of forms, and have 10 phone calls with our relationship manager.

Well, at least we can use our company credit card to make payments, right? Think again! CIT Bank doesn’t offer card
facilities to companies that have been trading for less than two years, despite some companies only accepting payment
by credit card.

Moving forward

The state of Hong Kong’s retail banking and business banking sector is truly an embarrassment for a region that once
prided itself for its ease of doing business. It is now taking its toll, with many startups being turned away from the
region and heading to countries like Singapore, Israel, Australia, the U.K. and the U.S. instead. Having once been an
advocate of Hong Kong as a startup hub, this is hugely disappointing.

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The Hong Kong Monetary Authority. Photo: Wikicommons.

The Hong Kong Monetary Authority is beginning to take notice, but questions remain whether or not they are taking
any real action. Rather than investing in startup competitions, the Hong Kong government would do well to first focus
their efforts on figuring out how they can offer the very basics to startups, beginning with business bank accounts.

Shaun Cunningham is the Co-Founder of Lukla Ventures. Follow him on LinkedIn.

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22 Comments

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Add a comment...

Hong Kong Free Press HKFP

https://www.hongkongfp.com/.../hsbc-tightens.../
Like · Reply · 31 January 2017 04:44

Ka Wang Wu
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10/15/2017 Hong Kong: The worst place in the world for a startup to open a bank account? | Hong Kong Free Press HKFP
Ka Wang Wu
Wait until you finally open your account just to have it unexpectedly closed.. then when you ask for a reason
they don't even bother to reply.. or say that they cannot disclose it due to internal procedures...
Categories · Reply Hot
Like  · topics
14 
· 30 January Hong Kong
2017 12:31 Sinobeat  Opinion Voices Lens Buzz Venture

Peter Crane · Chief Business Officer at Innovation Forum

This is a fantastic comment piece on whatSupport HKFP
is a HUGE problem. Having looked into launching my Science
backed start-up in Hong Kong, I was shocked as to how much red tape there was to even do the most basic
things (register a company, open bank account etc.). Furthermore, the funding sources available for early stage
companies are paltry (e.g. IncuBio) compared to other regions (UK, USA, Germany, China, Singapore etc.). In
my opinion, it is as if the HK government is just paying "lip service" to innovation/start-ups...I would be
interested to know how many people in the government or business departments have actually started
companies that aren't traditional professional services or property related... Consequently, I paid £100 to set-up
my company in the City of London with a bank account, company reg and a reg. office… this was all done in
less than 1 week…
Like · Reply · 6 · 31 January 2017 04:21

Raymond Leung
Peter, you might sympathize if you imagined yourself as the bank. It's almost open season on fining
banks with public support because banks are the big bad wolves after the 2008 financial crisis.
Companies are known to be used to hide identities and illicitly generated property. The banks are
obligated to understand the business relationship with its customers and know not just who including
beneficial ownership and reason for existence of companies but also "what" their customers are. If the
banks fail in these obligations, they get fined, ordered to fix the problem and get the negative
re... See more
Like · Reply · 1 · 1 February 2017 20:50 · Edited

Vince Wong
I didn't even have to make a penny deposit to set up my business account in the UK. No interviews. All
online. Hong Kong is so over.
Like · Reply · 1 · 5 February 2017 16:00

Victor Jeffery
It used to be the easiest and best city to do business, then China took over...
Like · Reply · 12 · 31 January 2017 03:11

Ailadi Yidali · Visual Designer at Frog Design

complaing about china, might make you feel better, as you spot somebody to blame but unfortunately
that's so wrong. I wish so much hk to be a bit more like sh, more flexible, more quick, more free. in
shanghai you go to the bank and open an account with your temporary residence permit. you don't
need a bunch of documents as here. hong kong seems like travelling backwards in time.
Like · Reply · 15 May 2017 19:19

Aaron Weller · CEO & Co-Founder at Lucid

Had the same issue opening my account and regularly run the risk of the bank shutting down the account. The
government and banks are stifling new businesses, it's easier to setup a company in Hong Kong and open a
bank account in Singapore. It's possible to reduce/eliminate money laundering and fraud without having such
arduous process to applying for a bank account.
Like · Reply · 1 · 1 February 2017 02:19

Kar Villard
Hi Aaron! Did you open the entity in HK then the bank account in SG? Which currency and bank? The
most affordable banks only cater to SG established firms. Thanks!
Like · Reply · 1 · 19 May 2017 22:17

Aaron Weller · CEO & Co-Founder at Lucid

Kar Bantugon Hey Kar, yes that's right! Setup the entity in Hong Kong, and then opened a bank
account in SG. The account was multi-currency (this was a requirement) and the bank was OCBC,
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10/15/2017 Hong Kong: The worst place in the world for a startup to open a bank account? | Hong Kong Free Press HKFP
account in SG. The account was multi-currency (this was a requirement) and the bank was OCBC,
which is a bank which mainly caters towards offshore banking (i.e. providing banking to companies in
other juristrictions to where they are incoporated). They aren't expensive (although they aren't cheap
either), so I would definitely consider them. The highest cost would be flying over for the meeting &
Categories  Hot topics Hong Kong Sinobeat  There
account setupassuming you aren't already in SG.
Opinion Voices Lens Buzz
are a few other banks which are catered
Venture
around the same concept (providing banking in other juristrictions to where you are incorporated), I
can try try and track those down ifSupport
it helps!HKFP
More than happy
 to answer any other questions
Like · Reply · 1 · 19 May 2017 22:44

Kar Villard
Ah so they also need the meetings! Ok, understood this point. I reside in SG but would move to AU by
end 2017. Considering if AU taxes will offset travel fees to SG in the long run. But it seems HK banks
are not attractive so it's a decision between AU and SG now. Too bad as my heart was set on HK.
Thanks heaps, really helfpul! I think I saw the multicurrency but thought they need an entity in SG so
I'll double check on that. I remember seeing 30k initial deposit if its an overseas entity. Thanks again
Like · Reply · 20 May 2017 07:13

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