Fitch Ratings warned such movement could take place as greater lending to the country could place loan portfolios in the administrative region at increased risk.
The agency observed gross mainland exposure might escalate by around 35 per cent of Hong Kong banking assets by 2012, with the rising influence of Chinese lenders on the region's subsidiaries possibly having an adverse influence on efficiency.
Sabine Bauer, director for financial institutions at Fitch Ratings - which is dual-headquartered in London and New York - said Hong Kong banks "will likely cede some of their historical strengths of robust capitalisation and low risk appetite if rapid growth in the mainland causes them to lower their underwriting standards".
The organisation observed liquidity at financial institutions in Hong Kong are adequate at present, with few near-term systemic liquidity pressures expected.
By Claire Archer