Banking

HSBC eyes China growth, 2010 IPO unlikely

(Agencies)
Updated: 2010-06-17 15:17

HSBC Holdings will grow in profit and size in China as the powerhouse economy further opens up its capital markets and fuels growth, the group's chairman told Reuters in an interview on Wednesday.

HSBC is keen to list its shares in Shanghai as part of its China plans but the initial public offering (IPO) is still pending regulatory approval and will likely not happen before the end of 2010, Chairman Stephen Green said ahead of a panel debate at France's economy ministry.

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"I see our business in China growing in profit, on the basis that it will grow in size... There is no market which is strategically more important for us," Green said. He did not give specific targets.

HSBC, Europe's biggest bank, already has strong ties to China and is the largest foreign bank there, employing more than 5,000 staff at branches in 23 cities. It is looking to Asia as a future growth engine, having recently relocated Chief Executive Michael Geoghegan to Hong Kong.

Green said it was too early to attach a value to the proposed IPO in Shanghai.

People familiar with the matter have told Reuters the bank hopes to raise $3-$7 billion in that listing.

Green said it was premature to talk of potential saturation as rival Agricultural Bank of China prepares a $23 billion IPO of its own.

"(HSBC's Shanghai IPO) is as much about a symbolic commitment, if you will, as it is about capital-raising," said Green, who has been chairman of the bank since 2006.

Growth opportunities

Potential opportunities in China include the "challenge" of creating a "significant" debt capital market, in which HSBC hopes to play a part, said Green.

He also said there was room to grow in retail and rural banking in China, where HSBC plans to expand its network by 20 percent or more this year.

"We would like to be in a position where we've got one branch in every province," he said.

HSBC's 100 branches in China seem paltry when compared with domestic rivals like Industrial and Commercial Bank of China that have thousands across the country.

Green said HSBC would also carry its weight against big players through its 20 percent stake in Bank of Communications (BoCom), which has about 2,650 branches across mainland China.

Green, who said last month he plans to stay at the helm of the company for at least the next year, visits China five times a year and said he has seen dramatic changes there during the past few decades.

"I first visited the Chinese mainland in 1984," he said. "When you went up to the border between Hong Kong and the mainland and you looked across at Shenzhen it was a little town of 20,000 people. It's now 8 million and it's only 25 years later."