China Merchants Bank tightens rules for mainlanders opening Hong Kong accounts

China Merchants Bank (CMB) will next week sharply tighten eligibility rules for mainlanders to open accounts at its Hong Kong branches, the latest move by Chinese lenders to curb capital outflows as Beijing steps up efforts to temper a slide in the yuan.

Starting February 1, applicants for account opening at CMB’s Hong Kong branches, as well as at Wing Lung Bank, controlled by CMB, must have assets at the bank averaging 5 million yuan each day over the past three months, a 100-fold increase from the 50,000 yuan threshold previously, CMB said in a notice.

The notice, distributed by CMB’s headquarters to its nationwide outlets that handle applications from mainland clients, was obtained by Reuters, and confirmed by the bank’s client service department.

Chinese banks, under pressure from the country’s foreign exchange regulators, have already taken a series of measures to restrict capital outflows, in a bid to ease depreciation pressure on the yuan.

The yuan fell nearly 7 per cent against the dollar last year, the biggest decline since 2009 as worries about the economy and expectations of a faster pace of US interest rate increase triggered an outflow of funds.

In November, China’s forex watchdog started vetting outbound payments worth US$5 million or more, and starting January 1, individuals purchasing forex at banks were banned from using the money for investment purposes, such as buying overseas properties and certain types of insurance.

Privately, wealth managers say once the money is in Hong Kong accounts, it would be difficult for regulators to track how the money is used afterwards.