(Yicai Global) March 23 -- There is no data yet to support large inflows of European and American deposits into Hong Kong banks after the liquidity crises of SVB and Credit Suisse this month, according to bankers and industry experts.

Due to the volatility of financial markets in Europe and the United States, it is rumored that USD76 billion of American funds have entered Hong Kong and the same is true for USD160 billion of Swiss funds. But Xia Chun, president and chief economist of Yintech Investment Holdings Financial Research Institute, said to Yicai Global that such rumors are not supported by the daily average figures the Hong Kong Monetary Authority publishes.

For the time being, offshore inflows are not too big, two Hong Kong-based account managers at Standard Chartered Bank and HSBC told Yicai Global yesterday. Meanwhile, the short-term Hong Kong Interbank Offered Rate has soared, indicating that liquidity provided by interbank lending is not wide. 

On March 21, the overnight HIBOR surged the most in one day since 2017 to 4.14286 percent, up more than 250 basis points from the previous day, which proves that funds are not so abundant, Xia said. The seven-day HIBOR also rose significantly, up nearly 130 bips. The rates determine lenders' borrowing costs, and banks could eventually pass them on to clients.

The rate boost can partly be explained by the gap between US and Hong Kong rates. The Federal Reserve raised interest rates yesterday, prompting investors to buy US dollars while putting pressure on the Hong Kong dollar. Still, Xia predicts that overseas funds will flow back into Hong Kong because its banking sector is quite healthy, and offshore markets are facing risks.

Hong Kong banks have been enjoying larger demand stemming from mainland clients after the Covid-19 restrictions were fully scrapped in February. HSBC told Yicai Global that three branches in Hong Kong are piloting special opening hours of seven days a week to cope with rising demand after customs clearance was reopened between the special administrative region and the mainland.

The average number of non-local residents visiting branches in February more than doubled from January, mainly driven by mainland customers, according to Peng Shuzhen, head of wealth management and consumer banking at HSBC Hong Kong. The customer service center received twice as many inquiries as in January, reflecting strong demand, Peng added.

The border opened for limited travel already in January. That month, Hong Kong banks' deposits rose 1.9 percent year-over-year, according to public data. In January 2022, deposits had declined by 11 percent.

Editor: Emmi Laine