The Hongkong and Shanghai Banking Corporation Limited (HSBC) plans to open branches in up to 20 major cities as China further opens up the banking sector.
But the banking giant is unlikely to make new investments in Chinese commercial banks after spending US$1.75 billion to acquire a 19.9 per cent stake in the Shanghai-based Bank of Communications, senior bank officials said on Friday.
"HSBC will continue its organic growth strategy in the mainland and seek to expand its branch network and broaden its service range at every opportunity," said John Bond, chairman of the HSBC Group in Beijing.
Bond was leading a visit of the HSBC Holdings Board to China, which, he said, was to let the board members to "see for themselves the great potential of the Chinese market."
HSBC Holdings is the holding company of the HSBC Group, a global financial and banking services provider. And HSBC is its banking flagship in the Asia-Pacific region.
"We look forward to providing more comprehensive services to our customers as China further opens its financial market," said Bond.
HSBC hopes to open branches in up to 20 cities in China when its World Trade Organization entry promises are implemented fully, he said.
HSBC has already launched branches in 10 mainland cities and is allowed to do renminbi business with local corporates in seven cities.
"In the next couple of weeks, we are ready to apply for licenses to operate (renminbi business) in Beijing and Xiamen," said Dicky Yip, chief executive of the bank's China business.
Both of the cities are on the list of newly opened cities for foreign banks to do renminbi business next month.
However, it is impossible for a foreign bank to build a network on the same scale as the big Chinese banks, said Bond.
Therefore, HSBC has chosen strategic partners in China to expand its distribution network and services.
HSBC Holdings signed an agreement with the Bank of Communications in August to buy a 19.9 per cent in the bank, the biggest single foreign investment in the Chinese banking industry.
They jointly launched a credit card center recently, with top management appointed by HSBC.
Yip said that they are waiting for regulator's approval to build a joint venture for the credit card business and the co-operation is envisaged as long term.
The partnership also requires HSBC to offer consistent technical assistance and send top managerial staff to help with management.
Therefore, "you should not expect us to make more investment in commercial banks (in China)," said David Eldon, chairman of the HSBC bank and a director to HSBC Holdings.
Some reports have speculated that HSBC may also bid for strategic investment in the Bank of China, one of the big four State banks in China that is undergoing a shareholding restructuring and preparing for a public listing.
But Eldon said the present focus for HSBC is to consolidate the investments it has made over the past few years.
However, no additional investments in commercial banking does not mean that HSBC will not invest in other financial services, such as insurance and asset management, Eldon said.
Apart from banking, the group has also made investments in insurance, asset management and trust businesses in China. And HSBC Holdings has also obtained a license as a qualified foreign institutional investor to invest in A shares, bonds and funds in China.
Normally HSBC does not do all business the group has in every market, but it does want to grow business in all sectors in China in the next five years, said Eldon.
(China Daily November 27, 2004)
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