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Tag: HSBC

  • HSBC to step up hiring in China

    HSBC to step up hiring in China

    HSBC Holdings plans to step up hiring in China for its retail and wealth business next year. The London-based lender is persisting with its expansion in China despite Britain’s economic slowdown and measures to stem capital outflows.

    The bank increased the number of retail bank employees in China’s Pearl River Delta by 57 per cent in the 12 months to September, according to Mr Kevin Martin, the firm’s Asia-Pacific head of retail banking and wealth management.

    The pace of hiring may accelerate next year as HSBC Holdings expands in areas like mortgages, credit cards, personal lending and wealth services in the Pearl River Delta, he said.

    “We’re exactly where we expected to be,” Mr Martin said in an interview in Hong Kong last Friday, referring to his unit’s growth in the region.

    “Historically, our customers in Shenzhen were Shenzhen-Hong Kong customers. Now the Shenzhen customers stay in Shenzhen because we’re building our local business as well as our cross-border business.”

    HSBC started its credit card business in China yesterday after it received regulatory approval to issue cards by itself. It had previously partnered Bank of Communications to do so. HSBC is seeking to issue more than 3 million cards in the short to medium term and add “a handful more” branches across China next year, Mr Martin said.

    HSBC is trying to capture business from China’s swelling ranks of affluent individuals even as economic growth slows and the authorities take steps to curb outflows of yuan from the country and cool the property market.

    Chief executive officer Stuart Gulliver said in February that HSBC will hire 4,000 employees mainly in the Pearl River Delta over five years instead of three, as a result of the economic downturn. Retail banking and wealth management accounted for 36 per cent of the bank’s Asian pretax profit in the third quarter.

    Mr Martin said: “Despite everything that’s happened, we’ve done everything we said we would. Retail business is a long-term business. We don’t make decisions based on changing regulations on the day. It’s the honest answer.”

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  • HSBC enables Apple Pay for Singapore cardholders

    HSBC enables Apple Pay for Singapore cardholders

    Customers can enjoy $5 off every transaction as a kick off promo. HSBC Singapore is treating its HSBC Visa and MasterCard credit cardholders with Apple Pay.

    Customers using iPhone SE, iPhone 6 to higher versions, and Apple Watch can use Apple Pay in stores with Visa payWave or MasterCard contactless payment terminals in Singapore and overseas.

    As a kick off treat, HSBC customers will be given $5 off for every Apple Pay transaction with their HSBC credit cards, with a minimum spend of $10 per transaction. This promo will be on until January 15 next year.

    Commenting on the launch, HSBC Singapore head of retail banking and wealth management Anurag Mathur said going digital is part of the banks strategy as technology and mobility are changing how our customers do banking.

    “Our findings show that awareness of contactless mobile payment is high amongst Singapore consumers (about 89%) and over half indicated interest to try this new payment method. We believe the security, privacy and convenience Apple Pay brings will appeal to all our customers, especially those who are also active users of our digital banking services,” he said.

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  • HSBC Amanah Malaysia appoints new CEO

    HSBC Amanah Malaysia appoints new CEO

    Arsalaan (Oz) Ahmed has been appointed as the Chief Executive Officer for HSBC Amanah Malaysia Berhad. As the CEO of HSBC Amanah Malaysia Berhad, Oz Ahmed will be leading the Islamic banking businesses for Retail, Commercial and Wholesale Banking, and reporting to the CEO of HSBC Bank Malaysia Berhad, Mukhtar Hussain.

    Before joining HSBC Amanah, Oz was appointed as the Head of Capital Financing & Financial Institutions for Barwa Bank in Doha, Qatar, where he led the development of Islamic debt capital market and wholesale banking platform.

    With 15 years of experience, Oz has distinguished himself as a thought leader in Islamic  and ethical finance and an expert in Shariah-compliant retail, corporate and investment banking. He has held a number of senior management roles with international exposure in the United Kingdom, Middle East and Malaysia.

    Commenting on his appointment, Mukhtar Hussain, CEO of HSBC Bank Malaysia Berhad, said, “Oz brings a wealth of experience vital for the growth of our Amanah business in Malaysia. As Malaysia strengthens its role as the Islamic Finance hub of Asia, it is crucial that we aid the progress with the right leadership, innovation and world class Shariah compliant products and services.”

  • Ex-UBS Executive Director Joins HSBC

    Ex-UBS Executive Director Joins HSBC

    A former Executive Director, Wealth Management at UBS, Singapore, has crossed the street to take up a senior role with rival HSBC Private Bank.

    In a statement HSBC Private Bank said: «We can confirm the appointment of Shang-Wei Chow as a Market Head, Domestic (Singapore) team at HSBC Private Bank, effective 3 November 2016. His appointment underpins our continued efforts to enhance our client servicing capabilities and deepen our engagement with clients.»

    Chow is a seasoned private banker with nearly 15 years of experience managing client relationships and wealth portfolios in Southeast Asia. As a Market Head of the Domestic team he will be responsible for new business development and deepening existing client relationships in line with HSBC’s strategy. Prior to joining the bank he was Executive Director, Wealth Management at UBS, Singapore.

    A Year of Change

    HSBC has seen numerous changes to its Singaporean private bank throughout 2016 including the departures of HSBC veterans Rob Ioannou to DBS and Michael Hua to LGT Private Bank.

    HSBC Private Bank in the city-state has also appointed several new bankers including a Head of Investment Counselling together with a new Head of Ultra High Net Worth Investment Counselling.

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  • HSBC plans to inject $1 billion into Indonesia business

    HSBC plans to inject $1 billion into Indonesia business

    HSBC plans to inject $1 billion of additional capital into its combined Indonesian business with PT Bank Ekonomi Raharja, an official at the Indonesian financial regulator, Ariastiadi, said on Thursday.

    HSBC separately said it would integrate its Indonesian business with Bank Ekonomi, but a bank spokeswoman in Indonesia declined to comment on the planned capital injection.

    The move would help to resolve a long-running issue for HSBC in Indonesia, where the government has encouraged banks in the country to operate via a single locally incorporated entity.

    Since the 2008/09 global financial crisis, local regulators have encouraged banks in their jurisdictions to incorporate themselves locally in order to make them easier to police and to ring-fence them from external shocks.

    Before the integration, HSBC operated its own branch on top of having a controlling stake in Bank Ekonomi.

    HSBC last year offered to buy out the minority shareholders of Bank Ekonomi and delist the Indonesian lender from the Jakarta stock exchange.

    Under the integration process, all the assets and liabilities of HSBC Indonesia will be transferred to the combined entity, which will be called PT Bank HSBC Indonesia, said HSBC’s Indonesian legal consultant, Kemal Siregar.

    HSBC shares were down 1 percent in London by 0940 GMT, while the benchmark FTSE 100 index () remained flat.

  • HSBC appoints new wealth chief in Singapore

    HSBC appoints new wealth chief in Singapore

    Anurag Mathur will become HSBC’s new head of retail banking and wealth management in Singapore as of mid-September.

    He will replace Matthew Colebrook, who is taking charge of the bank’s equivalent business in the Middle East.

    HSBC

    Mathur has most recently worked as head of international markets for HSBC’s retail banking and wealth management arm in Asia.

    This has seen him oversee Bangladesh, Brunei, Macau, Mauritius, New Zealand, Philippines, Sri Lanka and Vietnam.

    Mathur has most recently worked as head of international markets for HSBC’s retail banking and wealth management arm in Asia.

    This has seen him oversee Bangladesh, Brunei, Macau, Mauritius, New Zealand, Philippines, Sri Lanka and Vietnam.

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  • Hang Seng Index Registers Sharp Weekly Losses

    Hang Seng Index Registers Sharp Weekly Losses

    Hong Kong shares continued to move lower on Friday with the fifth successive daily Hang Seng retreat and sharpest weekly decline for close to three months as confidence deteriorated further.

    US equity markets were unable to make any significant impression on Thursday with marginal losses in the S&P 500 index and weakness in Asian markets. Oil prices were subjected to choppy trading conditions with slight net losses.

    There were further concerns surrounding the Chinese economic outlook with fears that stronger data in March and April would not be sustainable. Sharp declines in mainland Chinese equity markets also had an important impact in undermining Hong Kong confidence.

    Hong Kong retail sales data, released after Thursday’s market close was weaker than expected with a 9.8% annual decline in the year to March, the 13h successive decline with domestic demand subdued and weakness in international arrivals. There were some hopes that a weaker yuan in trade-weighted terms and recent dollar losses would help improve competitiveness and cushion the retail sector from further selling pressure.

    After opening significantly lower the Hang Seng index moved steadily weaker during the morning session with lows close to 20,150 ahead of the break. Buyers were unable to make any impression during the afternoon session and there was fresh selling late in the session. The index closed with a loss of 339.95 points and 1.66% at 20109.87, the weakest close since the second week of March.

    There were daily losses of over 2.00% for the finance and property sectors and the utilities sector also edged slightly lower despite gaining defensive support. HSBC and AIA dipped significantly lower during the day. The China Enterprises index fell 1.80% for the day, also the fifth successive retreat.

    Friday’s US employment data will be important for global markets with a particular focus on the dollar, which will influence regional markets next week. China’s trade and international reserves data is scheduled over the weekend, which will have an important impact on confidence surrounding the Chinese economy and equity markets with any decline in exports undermining sentiment.

    Hang Seng Daily Chart

    hangseng daily chart 06-05-16

  • HSBC expanding retail banking business in China’s Guangdong province

    HSBC expanding retail banking business in China’s Guangdong province

    HSBC, the largest bank in Europe and Hong Kong, is planning to expand its retail banking business in China’s Guangdong province in the coming years, with credit cards. securities trading and residential mortgage business in the pipeline, said Asia-Pacific chief executive Peter Wong Tung-shun.

    Wong was in Guangzhou on Wednesday morning with group chief executive Stuart Gulliver and Greater China head Helen Wong to co-host the launch ceremony of HSBC Express, the bank’s first train sponsorship programme. Under the sponsorship deal, 11 out of 22 trains between Guangzhou and Shenzhen will be named HSBC Express.

    “These trains are for mass commute. The programme aims to bring the image of HSBC to the public as we are expanding retail banking in Guangdong, which would provide huge opportunities for HSBC in the coming years,” Gulliver told the South China Morning Post at the launch ceremony.

    “While Hong Kong has 8 million customers, there are over 50 million Cantonese speakers in Guangdong province. HSBC is very strong in retail banking in Hong Kong, which is a big part of our business. Retail banking would be our important business thrust in Guangdong in the years ahead,” he said.

    HSBC now has 64 outlets in Guangdong, accounting for a third of its 177 outlets in China. The lender has traditionally focused on corporate banking in China but Gulliver said the growing wealth in Guangdong makes it the ideal place for retail banking. “On its own, the Guangdong economy is the 16th largest in the world. The middle classes are growing, and so is the demand for retail business services,” Gulliver said.

    Wong told the Post that retail expansion would include launching HSBC credit cards, which received regulatory approval last year but the launch date is yet to be confirmed.

    Securities trading is also in the pipeline. The bank has set up a joint venture with the Qianhai authorities, becoming the first foreign firm to hold a majority stake, of 51 per cent, in a securities joint venture trading stocks for customers from Qianhai special economic zone. It is to commence operation sometime this year.

    Wong said resident mortgage business is anther retail segment in demand, adding that the bank would also like to go into other types of wealth management businesses.

    “When people get wealthy, they like to buy homes. HSBC can offer mortgage and other wealth management services for these customers in Guangdong,” Wong said. “HSBC has a long history in both Hong Kong and Guangdong. We have been in Hong Kong for 150 years and set up our first office in Guangzhou in 1909. We financed Kowloon and Guangzhou railway in the old days. We are here for the long term,” Wong said.

    Gulliver said that with the many train and bridge projects linking Hong Kong with Guangdong, the interconnection between the two would be huge in the future. This is transforming the area from a low-end manufacturing centre into a high-end technology area led by Shenzhen, providing huge opportunities for HSBC.

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  • HSBC Going Solo in China Credit Cards Gives Boost to Expansion

    HSBC Going Solo in China Credit Cards Gives Boost to Expansion

    HSBC Holdings Plc winning approval to start a credit-card business in China’s $1 trillion market offers Chief Executive Officer Stuart Gulliver added flexibility in his push into the nation’s retail banking and wealth-management industries.

    The approval from Chinese authorities came as HSBC ended a card venture with Bank of Communications Co., the bank’s Asia-Pacific head Peter Wong said in a weekend interview, paving the way for the U.K. company to join Citigroup Inc. and Bank of East Asia Ltd. as the only foreign credit-card issuers on the mainland. Wong didn’t say when HSBC won the nod from regulators, or provide any specifics on how the business will be rolled out.

    Gulliver’s Asian ambitions have been dealt a setback by crashing commodity prices, a slowing Chinese economy and a pretax loss in the fourth quarter. An independent card unit in China would improve HSBC’s access to a fast-growing market that had 449 million cards on issue as of September and allow the bank to find new clients for its retail bank.

    Getting approved for its own operation in China “is a meaningful step for HSBC as it gives the bank the autonomy to run the business,” said Chen Xingyu, a Shanghai-based analyst at Phillip Securities Research. “Since the Pearl River Delta is HSBC’s focus, having its own credit-card business can help the bank expand in the region.”

    Credit-card offerings can act as a springboard for drawing customers to other parts of the business such as private banking, Chen said. HSBC is getting a license for a planned brokerage venture with Shenzhen Qianhai Financial Holdings Co.

    The Pearl River Delta, located to the north of Hong Kong and centered around the city of Guangzhou, is home to more than 40 million people. HSBC plans to add 4,000 jobs in that area as the bank shifts about $100 billion of investment to Asia in an effort to expand retail banking and wealth management. The bank will slow the pace of thathiring amid China’s economic downturn, but HSBC won’t alter its strategy, Gulliver said last month.

    Good Relations

    While the bank has ended its card venture with Bank of Communications, HSBC intends to maintain its roughly 19 percent stake in the Chinese lender, Asia-Pacific Chief Executive Officer Wong said Saturday in an interview on the sidelines of China’s annual congress of lawmakers in Beijing.

    “We still have a lot of other initiatives” with Bank of Communications, Wong said. “We have a very good relationship.”

    HSBC’s card offerings would compete with its old venture partner, which had 40 million domestic cards as of June, while Industrial & Commercial Bank of China Ltd. had 108 million, according to their 2015 interim reports.

    The London-based company has been working with Bank of Communications, China’s fifth-largest lender by assets, since 2004 on businesses including credit cards. The Chinese bank announced the establishment of the credit-card venture — with 2.5 billion yuan of capital — in an October 2009 statement to Hong Kong’s stock exchange.

    HSBC shares in Hong Kong fell 0.3 percent on Tuesday to HK$49.50 as of 1:31 p.m. local time, compared with the benchmark Hang Seng Index’s 0.8 percent loss. The bank’s stock dropped 20 percent this year.

    The number of Chinese credit cards in circulation at the end of the third quarter had nearly doubled to 449 million since 2010, central bank data show. That total is about the same as the combined populations of the U.S. and Japan. The outstanding balance on those cards was 6.7 trillion yuan, up 26 percent from a year earlier, according to the People’s Bank of China data.

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  • HSBC sets sights on Vietnam

    HSBC sets sights on Vietnam

    HSBC Bank (Vietnam) chief executive Pham Hong Hai (right) and Kelvin Tan, chief executive of HSBC Thailand, say HSBC aims to capitalise on its presence in seven of the 10 Asean countries.

    HSBC seeks to offer a better integrated regional service with the increase of cross-border investment following the formation of the  Asean Economic Community (AEC).

    The bank in particular is looking at Vietnam, where investment is set to surge under government policies to attract foreign investment.

    Kelvin Tan, chief executive of HSBC Thailand, said the company aimed to capitalise on its presence in seven of the 10 Asean member countries. Only Myanmar, Cambodia and Laos do not have branches of HSBC.

    “We made it very clear to our investors since last year that Asean will be one of our main focuses to help HSBC’s future growth,” said Mr Tan.

    HSBC will also focus on the Pearl River Delta, which consists of Hong Kong and Guangzhou, China.

    Mr Tan said the company will enhance the connectivity between its subsidiaries in each country to serve customers better and expand business.

    “We add value to our services by offering well-connected financial services in this region.”

    When a Thai customer expresses an interest in investing in another country in which HSBC operates, the bank will refer the customer to the office in that country, which can provide local information for doing business.

    Many HSBC customers have already expanded their businesses in other countries, especially Vietnam, to tap into a bigger market as well as take advantage of low labour costs, he said. Thai investors should benefit from the cheaper labour by setting up production bases there and using Thailand as their regional headquarters, which is the policy that the Thai government is promoting.

    “Thailand is in a very strategic location for logistics and air transport so pushing the RHQ concept is a step in the right direction, but the government will also have to include stakeholders as part for this development,” said Mr Tan.

    Pham Hong Hai, chief executive of HSBC Bank (Vietnam), said Vietnam had attracted heavy investment from Asean countries over the past few years as well as from other Asian countries such as South Korea, Japan, Taiwan and China.

    Vietnam’s low labour costs and political stability are the major draws that attract a huge amount of foreign direct investment, he said. Given the low wage rate for unskilled labour, the country has attracted a lot of labour-intensive industries.

    “Cambodia, Laos and Myanmar also have cheap labour, but Vietnam has the added positive factors of political stability and good infrastructure,” said Mr Pham.

    He said the low wage rate would last for about five years.

    However, one problem that has emerged in Vietnam is a shortage of workers at management level. Mr Pham said he expected the AEC integration to attract more white-collar workers to the country.

    He said Vietnam’s ruling party just elected a new central committee, which is expected to maintain the current policies to strengthen the country’s economy.

    The policies that will be continued include privatisation of state enterprises, modernising the banking sector, enhancing the effectiveness of fiscal policy and improving the business environment, he added.

    Vietnam’s state enterprises contribute 35% of GDP. The government is due to allow private firms to gradually own bigger stakes in the enterprises in order to enhance their effectiveness.

    The government is improving Vietnam’s business environment by passing new laws that will shorten the time required to start a new business and also to obtain a licence, Mr Pham said. There there are a lot of opportunities in businesses such as logistics, retail and manufacturing, which are growing quickly.

    “When the manufacturing sector grows it is always followed by logistics services to support the industries,” he said. “We also see that the retail sector’s growing fast with Thai companies such as Central and TCC Group investing in Vietnam.”

    He said with a population of 90 million, with young people forming a large proportion, Vietnam’s demographic make-up offers great opportunities for retail businesses to benefit from their purchasing power, which will grow significantly.

  • Maldives laments HSBC retail banking loss

    Maldives laments HSBC retail banking loss

    Maldives central bank on Thursday lamented the decision by Banking giant Hong Kong and Shanghai Banking Corporation (HSBC) to cease retail banking in the Maldives from April.

    Speaking at the parliamentary finance committee governor Azeema Adam insisted that the Maldives Monetary Authority (MMA) does not wish HSBC to cease retail banking services in the Maldives but said the country still needed the bank’s other services.

    Male branch of HSBC had decided to cease retail banking operations from April 28 and is now informing its customers.

    An official from the Maldives Monetary Authority (MMA) also confirmed the plans by HSBC’s Male branch to shift to corporate-only operations. The official, however, did not give details.

    HSBC was not available for comment.

    HSBC operates in Maldives as a trading desk of the HSBC branch in Sri Lanka.

    The governor however, pointed out that HSBC’s decision was not limited to the Maldives.

    “Every bank has its own standards. Certain services that they offer. Instead of forcing something on them we look to find out how it could prosper as a business. We put in a lot of effort to bring HSBC to the Maldives,” Azeema explained.

    “Even when they [HSBC] first came they had sought to serve high net worth customers and individuals. We had given them the operating license knowing that all those years ago.”

    Azeema also revealed that several challenges had prompted the bank to adopt cost cutting measures.

    “It’s not something we also want. But if we look at the services provided by the banks in Maldives, HSBC is the third largest bank in the country. In terms of deposit size and loan size,” she continued.

    HSBC is the second highest banking profit tax payer in the Maldives, she added.

    An account in HSBC has to be opened with an initial deposit of MVR 50,000; the highest initial deposit required of any bank that operates in Maldives. The bank also pays the lowest deposit interest rate at 1 – 1.75 percent. Deposit interest rate on US Dollar accounts is 0.10 percent.

    As the bank charges a high amount in fees, the bank mainly hosts Maldivian businesses.

    In May 2014, complaints mounted over the bank’s decision to close down accounts held by many small and medium businesses citing administrative reasons. The businesses had complained that the move was made without prior notice.

    The decision by one of the biggest banks in the world comes a week after it was revealed that the Maldives had lost a major international banker.

    President Abdulla Yameen Abdul Gayoom told residents of Gaafu Dhaal atoll Gadhdhoo on February 15 that one of the major correspondent banks had dropped Maldives from its client list, while another one is considering a similar move. The reason, according to the president, is false claims made about Maldives, including threats posed by home-grown jihadists.

    “When we make such claims without considering the repercussions, it’s the people of Maldives that has to suffer,” he said, after inaugurating a project to establish a clean water system in the island.

    The president did not identify the bank that had dropped the Maldives. Haveeru, however, understands that US-based JPMorgan Chase had terminated its dealings with Maldivian banks in 2013.

    A correspondent bank is a financial institution that provides services on behalf of another, equal or unequal, financial institution. It can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution.

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  • Cost of living here makes cosy retirement an elusive goal: HSBC

    Cost of living here makes cosy retirement an elusive goal: HSBC

    The cost of living makes Singapore one of the toughest countries to retire in, according to a new report.

    It found that about two in three workers here who are 45 or older would like to retire in the next five years but 48 per cent of them say they would not be able to. The global average is 38 per cent.

    Moreover, 30 per cent of pre-retirees predict that they will never be able to retire fully, compared with the global average of 18 per cent.

    Respondents here said the main impediment is a lack of savings or the burden of having dependants to look after.

    Having a lot of debt was raised by 26 per cent of respondents here, compared with the global average of 22 per cent.

    TOUGH FINANCIAL REALITIES

    The HSBC Future of Retirement survey shows that the financial realities of retirement make it an elusive goal for many Singaporeans.

    MR MATTHEW COLEBROOK, head of retail banking and wealth management, HSBC Singapore.

    HSBC surveyed 1,008 respondents – people aged 25 and above as well as retirees – here as part of a survey spanning 17 countries.

    START SAVING TODAY

    Even small amounts saved by starting today can lay the groundwork for a comfortable retirement tomorrow, placing retirement dreams squarely within reach.

    MR IAN MARTIN, chief executive of HSBC Insurance (Singapore).

    Mr Matthew Colebrook, head of retail banking and wealth management at HSBC Singapore, said: “The HSBC Future of Retirement survey shows that the financial realities of retirement make it an elusive goal for many Singaporeans.

    “This can be rectified with early financial planning and by seeking help from professionals who can provide advice on how to protect and grow your wealth.”

    Pre-retirees surveyed said they were anxious that events such as bad health and the need to care for elderly parents could interfere with saving for retirement.

    In spite of these concerns, retired life still offers much promise for some.

    The poll found that 62 per cent of Singapore respondents aged 45 and above who would like to retire in the next five years want to travel or pursue other interests.

    Also, 42 per cent of them would like to spend more time with family once they retire.

    Pre-retirees also expect relationships with friends, their partner and their children to improve.

    Mr Ian Martin, chief executive of HSBC Insurance (Singapore), said: “People should consider their personal aspirations when planning for retirement and ensure they are making sufficient financial provisions for this new chapter in life.

    “Even small amounts saved by starting today can lay the groundwork for a comfortable retirement tomorrow, placing retirement dreams squarely within reach.”

    HSBC also noted that about 56 per cent of pre-retirees here do not know how to predict how much they will spend on healthcare in retirement, even though 74 per cent believe that poor health will make saving for their golden years more difficult.

    To help individuals assess financial preparedness in realising their retirement aspirations, HSBC has launched the Retirement Profiler, an online tool to help individuals assess financial preparedness in realising their retirement aspirations.

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  • HSBC Gets Approval for Credit Card Operations in China

    HSBC Gets Approval for Credit Card Operations in China

    HSBC Holdings efforts to scale up its retail and wealth management business in China got a major boost with the U.K.-based company receiving permission to start a credit card business in China’s $1 trillion market.

    The approval from the Chinese authorities came after Peter Wong, Asia-Pacific Chief Executive Officer at HSBC, announced in a weekend interview that HSBC ended its joint venture with Bank of Communications Co. However, Wong believes that there are several other avenues of collaboration with Bank of Communications and that the two companies share healthy business terms.

    HSBC intends to maintain its stake of around 19% in the Chinese lender, Wong said on Saturday in an interview on the sidelines of China’s annual congress of lawmakers in Beijing.

    However, Wong did not specify when HSBC won regulators’ approval or provide details on how the business will be moved forward.

    The move makes HSBC the third foreign credit-card issuing company after Citigroup Inc. (C – Analyst Report) and The Bank of East Asia, Limited (BKEAY – Snapshot Report) to get approval to operate solo on the mainland. The permission to start credit card operations in the country would facilitate HSBC’s plan to expand China footprint.

    At its June 2015 Investor Day conference, HSBC unveiled plans to make increased investments in the under-penetrated Asian markets, with particular focus on China. Notably, the company continues to perceive China as an “engine of growth” and hence, intends to capitalize on Hong Kong’s high-quality customer base, where the market has grown over 13% in the past two years. Also, an ageing Chinese population is undeniably driving the demand for retirement and protection products in the country.

    More importantly, HSBC believes that building operations in its most-profitable Asian business will help it offset the negative impact from soaring expenses. Moreover, aided by such investments, the company estimates growth in pre-tax profits to outpace that in risk-weighted assets or RWAs, thereby enhancing its return on RWAs.

    Though Chief Executive Officer Stuart Gulliver’s plan seemed to suffer due to falling commodity prices, a slowing Chinese economy and a pretax loss in the fourth quarter, an independent credit card division in China would help HSBC expand the client base for its retail bank and enhance HSBC’s access to a rapidly growing market.

    According to a Bloomberg report, getting approved for its own operation in China “is a meaningful step for HSBC as it gives the bank the autonomy to run the business,” said Chen Xingyu, a Shanghai-based analyst at Phillip Securities Research. “Since the Pearl River Delta is HSBC’s focus, having its own credit-card business can help the bank expand in the region.”

    “There’s still strong demand for credit cards in China’s first-tier cities, but the business is getting saturated in some areas,” said Chen at Phillip Securities. “That’s why the potential in smaller cities is even bigger.”

    Though the Chinese economy is currently showing signs of weakness, we believe the country will resume its strength, given a sturdy performance history as well as efforts by its government to boost growth. This, in turn, will support HSBC’s prospects in the country.

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  • HSBC, Standard Chartered Caught Between ‘Brexit’ and China

    HSBC, Standard Chartered Caught Between ‘Brexit’ and China

    Two big U.K. banks’ shares tanked over the past couple of days, and unlike the British pound, they’re not weakening because of the so-called “Brexit” referendum — although that certainly doesn’t help.

    Instead, their fall may have a lot to do with the market and economic turmoil that has been taking place in China.

    The London-listed shares of emerging markets-focused bank Standard Chartered (SCBFF) fell by 10% at one point on Tuesday morning after it reported its first annual loss in more than 25 years.

    The bank reported a loss before tax of $1.5 billion last year, in sharp contrast to 2014’s profit of $4.2 billion.

    On Monday, HSBC’s (HSBC) shares fell in an otherwise rising market after the bank, which is the biggest in Europe and one of the biggest in the world by assets, reported a loss of $858 million before tax in the fourth quarter of last year, vs. a profit of $1.7 billion in the fourth quarter of 2014.

    HSBC, which is doing a lot of business in Asia and was even thinking of moving its headquarters there before deciding earlier this year to remain in London, eked out a 1% increase in pretax profit for full 2015 to $18.87 billion, but its adjusted loan impairment charges were up 17% at $3.7 billion over the period.

    The weak results of the two banks chime with rising investor worries about the exposure of U.K. banks to Asia, and particularly China, at a time when European banks have been making investors nervous again.

    Richard Barnes, senior director at Standard and Poor’s credit rating agency, received many questions about the risk of European banks’ exposure to Asia last week during an analyst call, and said the region was important particularly for HSBC and Standard Chartered.

    However, “we’ve seen European banks generally retrenching from a number of regions in the world including Asia … banks are trying to reduce exposure,” Barnes said, adding that, in China, “banks look again at their exposure to state-owned enterprises and are focusing on the ones that are likely to be supported by the government in a downturn.”

    HSBC has been deeply involved in the liberalization and deepening of China’s capital markets, having successfully negotiated a majority stake in a new, nationally licensed securities joint-venture in the mainland. HSBC Group Chairman Douglas Flint acknowledged in a statement on Monday that “China’s slower economic growth will undoubtedly contribute to a bumpier financial environment,” but he added that the country “is still expected to be the largest contributor to global growth as its economy transitions to higher added value manufacturing and services and becomes more consumer-driven.”

    He said this transition is driving the bank’s focus on the Pearl River Delta as a priority growth opportunity, as the area is a concentration of high-tech, research-focused and digital businesses.

    HSBC’s exposure to mainland China is around $143 billion, according to its annual report; of these, $135 billion are loans to other banks or non-bank financial institutions, sovereign and corporate loans, while $8 billion are loans to retail clients.

    China is perhaps even more important for Standard Chartered and has helped reduce the bank’s loss over the past year. Its Greater China business showed a pre-tax profit of $1.37 billion last year, compared to a loss of $1.33 billion in its European operations. In terms of exposure to China, Standard Chartered listed $77.67 billion in loans to customers in the country.

    The two banks would normally be sheltered from fears over their exposure to China by their presence in one of the strongest financial centers in the world, London. But with uncertainty in the U.K. rising because of the referendum on EU membership, expect a few particularly volatile months ahead for HSBC and Standard Chartered.

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  • HSBC to stop retail banking in Maldives

    HSBC to stop retail banking in Maldives

    Banking giant Hong Kong and Shanghai Banking Corporation (HSBC) is to cease retail banking services in Maldives from April. We understand that the Male branch of HSBC had decided to cease retail banking operations from April 28 and is now informing its customers.

    An official from the Maldives Monetary Authority (MMA) also confirmed the plans by HSBC’s Male branch to shift to corporate-only operations. The official, however, did not give details.

    HSBC was not available for comment.

    HSBC operates in Maldives as a trading desk of the HSBC branch in Sri Lanka.

    An account in HSBC has to be opened with an initial deposit of MVR 50,000; the highest initial deposit required of any bank that operates in Maldives. The bank also pays the lowest deposit interest rate at 1 – 1.75 percent. Deposit interest rate on US Dollar accounts is 0.10 percent.

    As the bank charges a high amount in fees, the bank mainly hosts Maldivian businesses.

    In May 2014, complaints mounted over the bank’s decision to close down accounts held by many small and medium businesses citing administrative reasons. The businesses had complained that the move was made without prior notice.

    The decision by one of the biggest banks in the world comes a week after it was revealed that the Maldives had lost a major international banker.

    President Abdulla Yameen Abdul Gayoom told residents of Gaafu Dhaal atoll Gadhdhoo on February 15 that one of the major correspondent banks had dropped Maldives from its client list, while another one is considering a similar move. The reason, according to the president, is false claims made about Maldives, including threats posed by home-grown jihadists.

    “When we make such claims without considering the repercussions, it’s the people of Maldives that has to suffer,” he said, after inaugurating a project to establish a clean water system in the island.

    The president did not identify the bank that had dropped the Maldives. Haveeru, however, understands that US-based JPMorgan Chase had terminated its dealings with Maldivian banks in 2013.

    A correspondent bank is a financial institution that provides services on behalf of another, equal or unequal, financial institution. It can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution.

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