A letter by the Association of Foreign Banks on behalf of the banks was cited by the Financial Times as saying, "They are finding it increasingly difficult to operate in the UK under the current regulatory environment."
The banks have complained that the "rigorously demanding" liquidity rules hamper their businesses growth in the region, and were left with no option other than to move from the country, as reported by the news agency.
One of the aforesaid Chinese bank is already operating three times more business volume through Luxembourg than London, according to the letter.
The banks have also expressed their displeasure over Financial Services Authority’s (FSA) decision to restrict them from opening branches in the city since 2008, despite several requests.
Currently, the Chinese banks are only permitted to open subsidiaries in London which are also regulated similar to a local bank with tight standards on transparency, capital cushions and liquidity buffers.
The issue comes to light following the recent claims by George Osborne, the UK Chancellor of the Exchequer, trying to make the city as an overseas centre for renminbi trading.
