Cyprus Mail

Some financial firms moving to back-up sites amid Hong Kong protest fears

Pro-democracy demonstrators gather on the fourth day of the mass civil disobedience campaign Occupy Hong Kong, in Causeway Bay, Hong Kong

By Michelle Price and Stephen Aldred

Some banks and other financial firms have begun moving staff to back-up premises on the outskirts of Hong Kong to prevent growing unrest in the financial hub from disrupting trading and other critical functions, two business services firms said.

Thousands of pro-democracy protesters have blocked parts of the Central financial district since Friday in protest against Beijing’s decision to limit voters’ choice in elections due in 2017.

The protests, that have been largely peaceful, represent the biggest potential business disruption since the outbreak of SARS in 2003, when several banks moved some of their dealing operations to other Asian trading hubs.

While business disruption has been limited to the temporary closure of a few bank branches, the decision by some firms to move or prepare moving staff to peripheral locations highlights deeper concerns that the protests could have wider repercussions in Asia’s biggest financial centre.

Kam Poon, vice president at telecom company Wharf T&T Ltd in Hong Kong, which provides up to 1,000 desks for banks and other financial firms, said clients had been calling up since Sunday to ask for space at its primary facility in the New Territories, away from Central which is on Hong Kong island.

“Our operators have been working day and night since Sunday night,” Poon told Reuters in a telephone interview late on Tuesday.

He said 15 clients had called up to advise they wanted the firm to prepare reserved space, while five others had put the company on standby.

“We do have people coming in already,” said Poon, whose company leases desks, PCs, phones and phone lines, as well as services for traders such as market data feeds and voice-recording.

The company’s clients are financial firms, including local and foreign banks.

Alan Mackay, chief operating officer of serviced offices provider Compass Offices in Hong Kong, said his clients had started to reserve space and some had begun to move in staff.

Compass Offices, which has 4,200 desks for lease around Hong Kong, said clients such as big international banks and hedge funds began putting in place short-term contingency arrangements three to four months ago, when pro-democracy activists belonging to the so-called Occupy Central protest movement stepped up their campaign.

During the past five days, those banks and hedge funds had activated their plans, Mackay told Reuters.

“We might move in or we might not, but we want that office there ready,” Mackay said, quoting typical conversations with clients. The largest reservation so far was for 25 staff, he added.

Both Poon and Mackay declined to name any of their clients, citing confidentiality issues.

Banks including JPMorgan, Bank of America Merrill Lynch, CITIC Securities, HSBC, Societe Generale, Barclays and Asia’s major research brokerage CLSA, have contingency trading arrangements that involve relocating traders to back-up premises, according to individuals at the firms.

One large international bank activated its business continuity plan over the weekend, ensuring that backup systems were ready if needed, according to an individual familiar with the discussions.

While the impact so far has been minimal, some staff have been relocated to facilities at the eastern end of Hong Kong, such as Taikoo Shing and neighbouring Quarry Bay, and some staff who could not reach the office were also working from home, this person said.

CITIC, SocGen, CLSA, and BofA Merrill are among those firms that have found themselves closest to the action, with premises in or close to the affected Admiralty district, next to Central.

A spokeswoman for CLSA said the brokerage had conducted business as usual on Monday and Tuesday.

“Should we not be able to conduct trading activity from our Admiralty office, we will relocate staff to our alternative trading site in Hong Kong,” she said. A spokeswoman for SocGen said the bank was operating normally, but had a dedicated back-up facility that gives traders a “like-for-like environment.”

CITIC Securities and Barclays confirmed they had back-up trading centres in remote parts of Hong Kong, but had not had to use them. A spokesperson for BofA Merrill said the bank operated normally on Monday and Tuesday.

HSBC said it had arrangements in place “to ensure we can continue to serve customers.” JPMorgan did not respond to requests for formal comment.

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