HSBC plans big China boost in run-up to planned IPO

HSBC plans big China boost in run-up to planned IPO

Taipei: HSBC Holdings is preparing to boost its China presence about 20% next year, as it ramps up for an IPO in one of its fastest growing markets, a top company executive said.

Europe’s biggest bank aims to open 15-20 new branches in China next year pending regulatory approval, up from the 90-100 it will have at the end of this year, Sandy Flockhart, Asia chief executive said in Taipei on Monday.

“We will be the largest international bank in China," Flockhart told reporters, following the bank’s first board meeting in Taipei. “We will continue to invest in China in 2010."

HSBC has been among the most active foreign banks in China, where it earned a pre-tax profit of $752 million in the first half of the year, accounting for about 15% of the company’s total. It competes there with the likes of Citigroup and Standard Chartered.

In addition to its own branch network, HSBC’s China investments also include a 19% stake in Bank of Communications, a 16.8% stake in Ping An Insurance, and a 12% stake in Industrial Bank.

HSBC said recently it would go to a dual-headquarters system in Hong Kong and London to emphasise the importance the bank places on Asia.

Last month, the bank said it was swinging its power base back to its place of birth 144 years ago by moving its chief executive to Hong Kong.

Flockhart said his bank, which posted a 50% drop in first half profit, will focus its Asia acquisition strategy on China and other emerging markets as it increasingly relies on the region for growth.

Shanghai IPO

To underscore the importance of China to its future, HSBC has become one of a handful of foreign companies to announce its intent to list in China when the country announces rules for such listings as soon as late this year or in early 2010.

Hong Kong’s Bank of East Asia has said it would like to make such a listing, and media have reported Standard Chartered, which also has a heavy China presence, is also interested in such a listing.

HSBC’s planned China IPO is dependent on regulatory requirements, and there is no specific timeframe yet, Flockhart said.

HSBC could raise as much as 50 billion yuan ($7.3 billion) in a Shanghai listing as soon as next year as it vies to become one of the first foreign companies to list in China, people familiar with the matter told Reuters in August.

The bank has hired China International Capital Corp (CICC) and Citic Securities Co to help arrange an initial public offering in Shanghai, a person with direct knowledge of the situation told Reuters.

The Shanghai flotation is a way to accelerate the bank’s growth in the mainland at a time when international rivals have retreated, the company has said.

HSBC Holdings said in August its first-half profit halved to $5 billion as it was hit by rising bad debts in the US, Europe and Asia.