Banking

HSBC set to boost mainland presence

By Wang Bo (China Daily)
Updated: 2010-09-14 09:48

Hong Kong - Sensing significant potential for business expansion thanks to China's fast growing trade ties with neighboring countries and accelerated efforts to internationalize the renminbi, HSBC Holdings is set to boost its presence in the country, a top company executive said.

"In addition to our plan to open 15 to 20 branches in the mainland annually, we will invest more on building the e-banking system in China to bring more clients under coverage," Peter Wong, chief executive of HSBC Asia-Pacific, said in an interview.

Besides Hong Kong, the bank has prioritized the Chinese mainland, together with Malaysia, Indonesia, India, Singapore and Australia, as strategic markets in the Asia-Pacific region and it expects to see substantial profit growth in these countries and regions in the next few years, Wong said.

In tune with China's policy of actively trying to internationalize the renminbi, Wong said HSBC, which has more than 8,000 representative offices in 88 countries and regions, is well positioned to become the preeminent international bank in renminbi trade settlement and bond issuance.

"We have so far done renminbi trade settlements in 26 countries (and regions) and the bank's extensive international network gives us an advantage in doing such business," Wong said.

The mainland authorities announced a huge expansion of the renminbi cross-border trade scheme and lifted a raft of restrictions blocking the free flow of the renminbi in Hong Kong this year.

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Many global banks, including HSBC, have quickly unveiled renminbi-denominated products and encouraged companies to use the renminbi, instead of the US dollar, for trade deals with China. They expect to gain a foothold in a market they hope will surge in the coming years.

Wong said HSBC could play an important role in boosting the offshore use of the renminbi, as it plans to launch various renminbi-denominated insurance and bond products in Hong Kong and gradually spread them to the global market.

As one of the most active foreign banks in China, HSBC has seen its retail network in China growing to 102 outlets this year. The bank, which earned a profit of $1.7 billion from the mainland in 2009, competes there with the likes of Standard Chartered Bank and Citigroup.

Though profits from its own businesses are not growing very fast due to sustained investment in the Chinese market, HSBC has been the most profitable overseas bank in China, Wong said.

Besides its own branch network, HSBC's China investments also include a 19 percent stake in Bank of Communications, a 16 percent stake in Ping An Insurance as well as an 8 percent stake in Shanghai Bank.

Wong reiterated that HSBC is committed to strengthening its strategic partnership with Bank of Communications (BOCOM), China's fifth largest bank by assets.

"When it comes to HSBC's banking partner in China, BOCOM is the only choice, while our stake in Shanghai Bank is simply a financial investment," Wong said.

HSBC will support BOCOM's entry into the international market and the two banks could cooperate on the renminbi business as the offshore renminbi market gradually develops, he added.

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