| HONG KONG, March 24
HONG KONG, March 24 A leading Hong Kong real
estate agent said on Friday that some banks it works with would
no longer accept payments for property transactions in the city
through China's state-backed UnionPay, the mainland's biggest
bank card provider.
The move is the latest by Chinese authorities to curb waves
of capital outflows that have put pressure on the yuan and
eroded the country's foreign exchange reserves.
"We received notice from the two Hong Kong banks we work
with ... that they will no longer accept payment by UnionPay
cards issued in the mainland," said Sammy Po, chief executive of
the residential department of leading Hong Kong real estate
agent Midland Realty International.
Mainland clients, who account for 5-10 percent of Midland's
new home clients, could still pay with other credit cards or
cash, Po said, adding that he expected the impact to be limited.
Many mainland Chinese use credit cards to pay for a portion
of property transactions in Hong Kong and UnionPay acknowledged
it was scrutinising some purchases.
"Recently, we have carried out investigations on large-sum,
suspicious, cross-border UnionPay card transactions and
reiterated to cooperating institutions the requirement to
strengthen merchant supervision," a spokeswoman for UnionPay
International in Hong Kong told Reuters.
"According to the UnionPay regulations ... it is strictly
prohibited to use a UnionPay card issued in mainland China for
cross-border acquisitions of property."
Capital outflows from China surged last year to a record
$725 billion, the Institute of International Finance said in
February, partly on expectations that the yuan would weaken
against the dollar.
The outflows, which caused a $320 billion decline last year
in Chinese foreign exchange reserves, have prompted authorities
to strengthen capital curbs. The yuan fell 6.5 percent against
the dollar last year, the biggest ever yearly fall.
In October, UnionPay said it would tighten regulations over
how mainland customers could use its debit and credit cards to
purchase Hong Kong insurance products, potentially restricting
yet another gateway for capital flight.
Beijing, which has intensified a crackdown on illegal
outflows this year, is concerned that buying overseas insurance
has become a way for Chinese to skirt restrictions on capital
outflows by disguising investment intentions.
(Additional reporting by Julie Zhu and Sumeet Chatterjee in
HONG KONG, Writing by Anne Marie Roantree, Editing by Mark