Hong Kong's Biggest Bank to Transfer Assets Abroad

From Associated Press

The largest bank in Hong Kong announced Monday that it was transferring all assets offshore, a move that would probably damage confidence in the British colony reverting to Chinese rule in 1997.

Hongkong & Shanghai Banking Corp. Chairman William Purves said the decision reflected the bank's global reach and did not signal abandonment of the territory where it has flourished for 125 years.

"We shall remain headquartered in the territory, which is an important and profitable market for us," Purves said.

Nonetheless, stockbrokers and others with a feel for Hong Kong's financial pulse said the move would be interpreted as another sign of eroding confidence in the future of the teeming capitalist enclave on China's southern tip.

Under a historic agreement between China and Britain, the Chinese have promised to preserve Hong Kong's way of life for at least 50 years after the British lease expires in 1997.

But faith in China's pledge has been shaken in the past year by the crackdown on a pro-democracy movement in Beijing and bickering between China and Britain over the exact terms of the takeover agreement.

Many Hong Kong residents who have the financial means have sought visas to emigrate, and a number of important businesses have restructured to protect their assets offshore in case the Sino-British accord falters.

One broker who requested anonymity said the Hongkong & Shanghai Bank announcement, which transfers the bank's assets to a British holding company, "leaves the impression that the British are pulling out."

Chinese authorities had no immediate comment on the move by the bank. Brokers noted that the decision will create the unique situation of a major financial institution, which operates in some ways like a central bank, being owned by a company based abroad.

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