tim's experiment

The whole of the Hong Kong commentariat – or at least that segment of it which likes banks and the Hong Kong government – has been churning out explanations for Joshua Wong’s mysterious difficulty in opening a bank account at HSBC. As often happens when the destination to be reached by an argument is more important than the means for getting there, the two leading innocent explanations flatly contradict each other.

On the one hand we have the apologists for the banking sector, explaining that Mr Wong’s status as a high-profile person would mean his account, if he were allowed to open one, would need constant supervision and attention. No doubt this is necessary to ensure he does not join many famous people in sending his money to Panama.

On the other side we have people who, perhaps, do not like banks but really dislike Mr Wong. They say that Mr Wong, far from being a high maintenance celebrite, is a nobody. He is a young man with no job and no income. Why would a bank anywhere want such a customer?

Well times may have changed but I found this last question easy to answer. Mr Wong is a student. Banks have long since realized that by being nice to people while they are students they can snare customers whose future prospects are bright, however poor they may be now.

When I was a student this recruitment of the poor but promising was conducted with enthusiasm. All the banks advertised in student publications, however disreputable the other contents of those publications might be. All sorts of goodies were offered as an inducement to setting up an account. Indeed having inherited the family connection with Barclays before I reached university I rather resented the fact that I could not qualify for any of the presents.

The University of Lancaster’s then small and isolated campus had two bank branches, which in those days averaged out at about a branch per 1,000 or so students, which seems rather generous. Also generous was the general attitude to overdrafts. The manager of the Nat West branch, who was particularly famous as a willing lender, once explained to me that his employers accepted that his branch should not be measured by any of the usual banking metrics: its job was to recruit grateful future customers.

Universities continue to enjoy this sort of service, though. Baptist University also has two bank branches. As banking in Hong Kong is almost entirely a duopolous enterprise split between the HSBC group and the Bank of China fleet we can hardly expect more.  I suspect that if Mr Wong had turned up at a university branch where penniless young people are the standard cannon-fodder he might have opened an account without anyone noticing.

This may of course be quite wrong. One of the strange features of Hong Kong life is that although banking is supposed to be a fiercely competitive business one hears many complaints nowadays from people less newsworthy than Mr Wong of how difficult it is to open an account.  Perhaps both explanations are true. They don’t want you if you are rich and famous – too much trouble – or if you are poor and obscure – no money, no profits.

Certainly there is a particular problem for small businesses wishing to open a business account. Banks do not make it easy and will often flatly refuse. I have heard several sad stories of people tramping the streets of Central in search of a bank which was willing to take their business.

Indeed a popular view in start-up circles is that this would be a better route for government aid than the usual loans, advice, start-up parks and what have you. To boost business creation what they need is a simple bank, doing the simple stuff – cheques, deposits, credit cards – and skipping the investment advice, “financial products”, insurance disguised as financial products, and other efforts to diversify in the direction of rich customers. It should be willing to open an account for anyone with a business registration certificate, an ID card, and a deposit. It should have no connection with New York, so the American authorities can be told what to do with their FATCA forms.

It is one of life’s little paradoxes that the same bank which paid multi-million dollar fines for doing business with Mexican dope fiends is now threatening to close the accounts of harmless charities if they cannot prove they are not American.

Meanwhile what is poor Mr Wong to do if he really wants to open a bank account? Well there’s always the British Virgin Islands. They, it seems, are not fussy.