Bond expects HK to set pace of turnaround
Hong Kong is expected to suffer along with other economies amid the world's economic slowdown but should be the first in the region to rebound, according to HSBC Holdings group chairman Sir John Bond.
However, he would not rule out the possibility that HSBC would layoff staff following the economic uncertainty that has occurred since the September 11 terrorist attacks.
'We never rule out laying off staff but for HSBC it will always be the last resort,' he said after addressing the Hong Kong General Chamber of Commerce yesterday.
'We would always prefer to handle it on a voluntary basis.
'I am afraid in a free market there are no guaranteed jobs, including mine.'
Last week Bank of China announced it would release more than 400 employees following the merger with its 10 Hong Kong-based sister banks.
Sir John said it was hard for Hong Kong's open economy not to be affected by the rest of the world.
'But I am confident Hong Kong will come out faster and stronger than most of others.'
Hong Kong's political stability, low taxation rates, pool of talent, open economy and its increasing connections with the mainland definitely provided a competitive advantage, Sir John said.
Speaking of the heavy sell-off in HSBC shares since September 11, he said the bank could not buck the market trend which showed signs of overselling.
The decline in the HSBC share price was in line with world markets, he said.
However, the bank had diversified risk which was helpful in these types of situation.
Sir John refused to comment on whether the bank's non-performing loans would increase this year but said that about 43 per cent of its assets were in loans, which was lower than its competitors. HSBC has a long history of being conservative in its lending policy and in assessing the need for provisions.
Asked whether the bank would consider a share buy-back, Sir John said the board had closely monitored the share price and would consider all the options.
At the close of business on Friday, HSBC shares had fallen more than 26 per cent since the terrorist attacks. A technical rebound yesterday saw the share price jump HK$2.75, or 4.01 per cent, to close at HK$71.25.