HSBC closes in on stake in mainland securities house
HSBC Holdings may have moved a step closer to taking a stake in a mainland securities house, with Fujian-based Industrial Securities the most likely target.
Industrial Securities, a medium-sized brokerage with registered capital of a little less than two billion yuan (HK$2.27 billion), was reported last week by Chinese media to be poised to submit a listing application - a move typically preceded by taking on a large private investor to boost the appeal of a public float.
Without identifying a target, Peter Wong Tung-shun, an executive director of HSBC's Asia-Pacific unit, Hongkong and Shanghai Banking Corp, confirmed on Friday that HSBC hoped to tie up a long-awaited deal with a mainland securities partner before seeking a listing on the Shanghai Stock Exchange.
He declined to comment on the timing of HSBC's Shanghai listing, but the China Daily reported last month that the listing by Europe's largest bank was 'virtually a done deal', reinforcing signs that a likely deal with Industrial Securities could be imminent.
The group would benefit from the fast-growing equity market in the country by developing a securities business on the mainland, said Wong, and the joint venture would also enable its partner to take part in HSBC's initial public offering if the deal was concluded before HSBC's mainland listing.
'But it is difficult to tell when we can list on the mainland,' he said.
HSBC has a wide spread of financial businesses on the mainland, from commercial banking to asset management and insurance, but so far lacks a securities business.
Vincent Cheng Hoi-chuen, the chairman of the Asia-Pacific unit, told reporters last month that the group was in talks aimed at securing a possible deal to take a stake in a mainland securities house and since then several media reports have identified Industrial Securities as the other party to the talks.
Wong, who has been named chief executive of Hongkong and Shanghai Banking Corp as a result of the group's recent reshuffle, said exploring business opportunities in Greater China would be one of his priorities.
'The Greater China region now accounts for more than 30 per cent of group earnings and this will be even greater in the future,' he said.
HSBC last week announced that its group chief executive Michael Geoghegan would move back to Hong Kong in February. The decision, it said, reflected the West-to-East shift in world economic power.
Wong said potential growth in Asia was the highest among emerging markets worldwide, of which Greater China, India and Indonesia had even greater potential.
He said the bank had set up a committee which he would chair to further explore business opportunities in Greater China as the ties between Hong Kong, the mainland and Taiwan would be closer.
Wong said the bank would put more resources into the mainland, particularly in Guangdong province, and consider setting up a district centre there to aid further business development.
He added that Hong Kong could act as a financial platform and asset management centre to help those on the mainland looking for overseas expansion and foreign funds that wanted to invest on the mainland.
Meanwhile, Wong expected the mainland and Taiwan would sign an economic co-operation framework agreement, a deal that would bring the two economies closer, by the end of this year or early next year. But he did not expect the closer ties to affect Taiwan's fund flows through Hong Kong.
Separately, Wong, who is the chairman of the Hong Kong Association of Banks, expressed concern on the post-sale 'cooling-off' period for investment products proposed by the Securities and Futures Commission in a consultation paper.
He feared it could limit financial innovation and a working group of the HKAB would study the details and look for solutions that cold enhance investor protection without affecting innovation.
