Hong Kong virtual lender ZA Bank eyes retail services for digital assets as new regulations come into effect in June
ZA Bank, the city’s largest virtual lender, is scoping out opportunities to roll out services related to virtual assets after the new digital asset regulatory regime is introduced in June.
The lender already offers banking services for digital assets trading platforms.
“We are diligently preparing to introduce virtual asset trading services for retail investors,” CEO Ronald Iu Man-chung said in an interview. “We will announce more details to our customers once all preparation work is complete.”
ZA Bank’s planned expansion into the digital asset sector comes as Hong Kong’s mandatory licensing regime for centralised cryptocurrency exchanges takes effect from June 1.
(From left) ZA Bank’s alternate CEO Devon Sin, CEO Ronald Iu, and alternate CEO Calvin Ng at the virtual bank’s office in Hong Kong. Photo: Jonathan Wong
OSL and HashKey are currently the only exchanges licensed by the Securities and Futures Commission (SFC) to serve retail investors, while 24 cryptocurrency firms submitted their applications by the February 29 deadline that would determine whether they could continue to operate in the city. Cryptocurrency exchanges operating or marketing in Hong Kong that have not yet submitted an application must now leave the city by May 31.
The SFC also approved Asia’s first exchange-traded funds that invest directly in bitcoin and ether. They started trading on the Hong Kong stock exchange on Tuesday, a significant step in the city’s efforts to become a cryptocurrency hub.
“As Hong Kong develops more digital asset trading, ZA Bank is committed to providing banking services for the digital sector and other Web3 start-ups,” Iu said.
Only digital exchanges licensed by the SFC can serve retail investors from June 1. Photo: Shutterstock
ZA Bank, a joint venture between a unit of ZhongAn Online P&C Insurance and Sinolink Group, was one of eight virtual banks licensed by the Hong Kong Monetary Authority to boost fintech and smart banking in the city in 2020.
Iu said ZA Bank registered strong growth in both deposits and loans last year after it introduced an array of products to customers.
Deposits rose 28 per cent year on year to HK$11.7 billion (US$1.4 billion), the most among its virtual competitors.
Total outstanding loans stood at HK$5.3 billion, 9 per cent higher than a year earlier, which helped to boost ZA Bank’s interest income by 36 per cent to HK$260 million.
Fee income rose 4.7 per cent to HK$85 million last year, mostly from the sale of fund and insurance products to retail investors.
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ZA Bank teamed up with digital insurer and sister company ZA Insure to sell policies starting in May 2021. It also partnered with Generali Hong Kong, a traditional insurer, by referring ZA customers to the Italian company’s agents from April 2022.
The lender now offers 120 funds from more than 20 fund companies, including Allianz Global Investors and Franklin Templeton.
Calvin Ng, alternate CEO of ZA Bank, said the lender will continue to diversify its products and services to stay competitive, pointing to the launch of US stock trading services in February, which has proved to be popular with investors.
“We believe that offering the right products to meet the financial needs of customers is the right way to attract customers to stay with us,” Ng said.
