HSBC plans to open a rural bank in December as the first overseas bank to explore the market, senior bankers said yesterday in Chongqing.

The new company, based in the city of Suizhou in central China's Hubei Province, is expected to open in December with about 25 employees, Peter Wong, the bank's executive director for Hong Kong and the mainland, said yesterday in Chonqqing.

HSBC, the largest international bank in China, will take part in China's pilot program for rural banking through its new wholly owned entity, HSBC Rural Bank Co Ltd.

Vincent Cheng, chairman of the Hong Kong and Shanghai Banking Corp, said yesterday that the bank has no timetable to further boost its stake in Bank of Communications.

HSBC increased its stake in Shanghai-based Boom to 19.01 percent from 18.6 percent earlier this month. The investment cap for a single overseas player on Chinese bank is set at 19.99 percent.

HSBC bought a 19.9 percent stake in BoCom for US$1.75 billion in 2005. Its shares were diluted after BoCom sold shares and went public in Hong Kong and Shanghai.

The two parties agreed that HSBC could raise its stake to 40 percent between 2008 and 2012 pending governmental approval.

HSBC has more than 80 projects with BoCom under way, Cheng said. The two parties have issued more than three million co-branded credit cards so far.

Hong Kong and Shanghai Banking Corp, the Asian division of HSBC, held its board meeting in Chongqing yesterday, the first time the board has met in western China.

HSBC set up a representative office in Chongqing in 1999 and set up a branch in 2005. HSBC opened a sub-branch in the municipality in August and is planning to open a new one before the end of this year.

HSBC will open more outlets in western China, said Richard Yorke, president and chief executive officer of HSBC China.

HSBC now has about 4,300 employees on the mainland with 53 outlets, including 16 branches and 37 sub-branches.

HSBC has invested more than US$5 billion on the mainland by investing in BoCom, Ping An Insurance and Bank of Shanghai, plus its own organic growth.

(Shanghai Daily October 31, 2007)