HSBC to offload stakes in Chinese financial institutions

HSBC Holdings Plc's investment plans in China may be on hold, as Europe's largest lender continues to sell stakes in Chinese financial institutions.

Hong Kong media reported on Thursday that HSBC is gearing up to offload all of its holdings in the Bank of Shanghai to replenish capital and meet higher global capital adequacy requirements.

Earlier this month, the lender said it was in talks to sell its 15.6 percent stake, which is valued at $9.6 billion, in Ping An Insurance (Group) Co, China's second-largest insurer.

HSBC bought the Ping An stake for $1.7 billion in a series of transactions in 2002 and 2005.

Apart from its holdings in Ping An, HSBC has a stake of 19.9 percent in the Bank of Communications and 8 percent in Bank of Shanghai, which is preparing to list both on the A-share market and on the Hong Kong market.

HSBC is the second-largest shareholder of Bank of Shanghai, which had a year-on-year profit growth of 15.5 percent in 2011, while its total assets increased by 15.7 percent to 655.8 billion yuan.

HSBC has been phasing out its operations in non-core business areas since last year, but has constantly vowed to accelerate its expansion in China, saying that the country would not be affected by its global contraction strategy.

Stuart Gulliver, the group's chief executive, said last year that the bank plans to cut between $2.5 billion and $3.5 billion in costs by 2013 by turning around, or disposing of, some businesses.

HSBC Asia Pacific chief executive officer Peter Wong said earlier that the lender is now reviewing its retail-banking operations in South Korea. Korean newspaper Donga Ilbo reported that HSBC is planning to shut down its retail banking operations in the country.

New capital adequacy standards set by the Basel Committee on Banking Supervision will be implemented in 2013, requiring a 7 percent core capital adequacy ratio for lenders. For systemically important banks such as HSBC, it added an additional 2.5 percent, increasing the criteria to 9.5 percent.

HSBC declined to comment when contacted by China Daily.