Global bank HSBC Holdings hopes to strike an investment banking partnership in China as part of its expansion in the region, the bank's Asia chairman said on Tuesday. The lender had no plans to curb its expansion efforts in Asia-Pacific as inflation and a global slowdown weigh on the region's economies, although it continues to fine-tune its investment plans, Vincent Cheng said an in interview.
He said organic expansion will drive growth in Asia, including the key emerging markets of China and India, although HSBC is always keeping an eye open for acquisition opportunities. "We are growing our branches, we are investing in technology in Asia-Pacific," Cheng said. "If we can buy something, that would be nice, because it's a faster way of expanding our business, but if we cannot we can still use organic growth to grow our business," he said.
In China, foreign institutions covet licences that allow them to form investment banking joint ventures to underwrite domestic stock and bond offerings. Beijing has been slow to grant such licences, with only a handful of banks managing to win approval for mainland securities joint ventures, including Morgan Stanley, Goldman Sachs, UBS and Credit Suisse. HSBC hopes to add its name to that list.
"We are looking hard at whether we can form an investment banking JV in China," Vincent Cheng told Reuters, a day after the London-based bank, which is Europe's largest, posted a 28 percent drop in first-half profit.
"We have an asset management company in China already, so basically a securities JV is the only sort of hole at the moment in terms of our services in China," said Cheng, declining to give details on any potential tie-up. "We have been looking and talking," he said. In the first half of this year, HSBC made its first major banking acquisition in Asia since 1965 with the purchase of The Chinese Bank in Taiwan.
It is also seeking long-delayed regulatory approval for its $6.3 billion acquisition of Korea Exchange Bank, and said on Monday it would submit an updated application with South Korean authorities. "We are very committed to Korea, and we really think we are the best bank to acquire KEB," Cheng said. "We will continue to invest in Korea, one way or another."
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