Are you starting a new business in Hong Kong, or do you already have an established business you want to expand into Asia?
These are just two of the many scenarios where you will most likely need to open a bank account in Hong Kong.
Let’s get the bad news out the way: opening a bank account in Hong Kong is not an easy task.
Be prepared to invest time, and possibly money, with no guarantee that you will have a bank account opened in the end.
Thankfully, we have gathered the common questions to help you to be fully prepared.
1. What kind of bank account for my business?
When you are launching your company, you’ll need a specific kind of bank account: a business bank account.
A business bank account is a bank account opened under the name of your company.
Some banks also refer to this as a corporate bank account or a commercial bank account.
Why must we clarify this point?
First, you must use the correct terminology when applying for an account.
Second, too many entrepreneurs are carrying out the business of their company using a personal bank account, i.e. an account opened under their name.
This is a recipe for disaster when the time comes to do company accounting and pay both corporate and personal taxes.
2. What documents are required?
The first thing to do is to complete the bank account opening form provided by the bank.
Most banks have this information available online, meaning that you can download it and have it filled out before you visit the branch.
Below are a few useful links:
You will also have to gather all the necessary documents required by the bank.
Different banks have different requirements, but the list of documents usually consists of the following:
- A resolution by the board of directors: the purpose of this resolution is to approve the bank account opening and give one person the authority to handle the application with the bank. The usual practice is to provide power to one of the directors of the company.
- Establishment documents: all documents proving that your company was duly incorporated and validly registered. For a Hong Kong company, this includes the certificate of incorporation, a valid business registration certificate, and the articles of association.
- Corporate chart: a chart showing the shareholding and management structure of the company. This chart must present on one page who the directors, the shareholders, and the ultimate beneficial owners of the company are. It must also show the percentage of ownership of each shareholder in the company.
- ID documents: a copy of the ID documents (passport, ID card, or driver’s license) of the directors, shareholders, and ultimate beneficial owners.
- Proof of residence: utility bills or bank statements of the directors, shareholders, and ultimate beneficial owners. The evidence of residency must indicate the residence address and usually be dated no more than three months.
- Business plan: a simplified business plan explaining the company’s business, and that gives projections of the company’s expenses and revenues for the coming 12 months.
- A Certificate of Incumbency and Certificate of Good Standing for offshore company
Typically, some of the documents must be certified by a lawyer, a public notary, a certified public accountant, or a company secretary.
All these professionals will very likely charge you for their service.
So, you should check with the bank that it is satisfied with the content and format of the document before arranging for its certification. This will save you the cost of paying twice.
3. Can I open a business bank account even if your company is not in Hong Kong?
Yes. It’s perfectly legal for a company registered outside of Hong Kong to apply for a business bank account in Hong Kong; as it’s perfectly possible for non-residents to apply for it.
However, banks will often be reluctant to open a bank account for a non-Hong Kong registered company.
Put yourself in the bank's shoes: why would a company with no presence in Hong Kong need a business bank account here?
Opening a bank account is especially questionable when the company is from some exotic location known for its lack of transparency.
If you have business opportunities in the region, you may consider coordinating with a company set up in Hong Kong already, or, have one of your shareholders be a resident.
This would certainly make your life easier with banks and leave you more time to focus on business.
4. Can I open a business bank account online?
No, it’s simply impossible to complete the whole process online!
There are a handful of banks that allow you to submit the application form and documents online, but you’ll still need to meet them in Hong Kong to finalize the process.
Typically, at least one of the directors of the company must visit the bank. However, depending on the bank, a physical meeting may be required for all directors and shareholders.
Don’t think that you can simply show up at a branch, meet with a bank representative, and have the business bank account opened on the spot. Banks have application forms they want you to sign, lists of documents, and information they want you to provide.
Simply put, do your homework before visiting the bank (check their website/give them a call), or you’ll end up traveling to the most expensive city in the world just to hear a bank representative explain the process to you!
5. What is the cost of opening a bank account in Hong Kong?
You should be prepared to pay, at minimum, an account opening fee, and initial deposit.
It’s impossible to tell the exact cost of opening a business bank account. Even giving a range is difficult as the fee policies of banks are far from being easy to understand.
You can easily get lost very quickly with the added fees they charge. If you are brave enough, we encourage you to read the fee policies from the following banks:
On top of fees, to maintain the account, you need to keep a minimum balance in the account as well as pay a monthly maintenance fee.
Finally, because opening a business bank account is so difficult, many corporate service companies will charge you several thousand US dollars to assist you in the process.
Not surprisingly what has become a source of frustration can now be a profitable business for others.
If you would like to consider this, it is important to note these companies do not guarantee the opening of the bank account, so make sure you get reimbursed in case of rejection.
6. How long does it take to open a business bank account?
You should expect several months before your business bank account is up and running.
It all starts with meeting a bank representative who will ask you to complete application forms and tell you to submit certain documents and information about your company.
Your application will then go through a review.
This review takes a minimum of several weeks, but don’t be surprised if it drags on for a few months, during which time you may be asked to provide more documents and explanations at any given time.
However frustrating it may be, it’s important to remember that there is nothing you can do to accelerate the process.
The process ends with either a “yes” or “no” answer. “No” is a commercial decision by the bank, and the bank will not give you a specific reason for their decision.
7. What are the benefits that come with opening a business bank account?
Assuming your company will be successful with its business bank account application, you may wonder what is in the “package”.
Here are the perks:
- Online banking: you will be able to manage your banking affairs through the digital platform of the bank. However, user-friendliness and features vary considerably from one platform to the other. It is worth checking the platform before applying for a bank account to avoid any surprises.
- Multi-currency account: with Hong Kong being a financial hub in Asia, most business bank accounts are multi-currency. This feature is pretty handy if your company receives and makes payments in different currencies, notably because it will help you to save money on FX commissions.
Pitfalls to be aware of:
- Payment card: don’t expect to receive a payment card that you can use wherever your business brings you. What you will get is a debit card you can use for local payments and ATM withdrawals in Hong Kong only.
- Poor customer support: You have a question about your account? Call customer support at 8888 8888, listen to the long pre-recorded message, then dial #1 – dial #4 – dial #2 – dial #9 and expect to have a painfully long waiting time until you get the chance to talk to a real person.
8. Why is it difficult to open a business bank account in Hong Kong?
Largely, thanks to international criminal activities like that of Pablo Escobar or the Panama papers.
To fight these activities, almost every country in the world has decided to impose strict compliance rules on banks.
In short, banks must know who their clients are and monitor their transactions. Keeping track of clients is undoubtedly a good thing.
However, as these compliance rules get more strict and complex every year, applying them is increasingly costly for banks, where they also face the risk of multi-million dollar fines in the case that something goes wrong.
In all, this means SME business accounts become less profitable for banks, and therefore banks are less keen to make the process easy for SMEs to open account.
Are you getting the full picture?
Costs are on the rise, and the significant risk of fines, means banks are becoming less and less interested in serving your SME business.
This trend isn’t specific to Hong Kong; yet Hong Kong has become one of the countries where it’s most challenging to open a bank account. It's a mix of regulations and an aging financial system.
9. Is there a possible alternative to opening a business bank account?
Neobanks are one of the newest trends in financial services in recent years, where banks invest in software-first approaches to banking rather than account products.
Generally speaking, SMEs never open complicated accounts, and so if a bank can provide other services like better online banking, then this becomes more attractive.
Virtual banks are a type of neobank, but there are also options for business accounting that are not banks at all, in which a payment software stores your money in a segregated bank account.
Statrys is an unbanked solution for business accounting in 11 currencies with FX services to boot. Open an account today in less than 48 hours.