Mr. Shangkong | For HSBC, the first love is apparently not the deepest
Bank of Shanghai may have been HSBC's original mainland partner, but Stuart Gulliver seems happy to snub it for a more recent tie-up
Remember that old saying: in business, there are no friends, no enemies, but only "interests"? Well, last week, HSBC's chief executive, Stuart Gulliver, gave the saying fresh meaning when talking about his bank's two partners in China.
As many people know, HSBC, which has its head office in London, has a nearly 20 per cent stake in the Shanghai-based Bank of Communications, a deal signed by John Bond when he was the top boss at the global banking group in 2004.
When I wrote my first book, Foreign Banks in China, some years ago, I found out through interviews and research that the HSBC board at that time was initially quite divided over Bond's proposal to invest in Bocom, because some felt the price tag was too high and HSBC already had a partner in China - Bank of Shanghai - in which it held an 8 per cent stake.
Today, HSBC should feel it was lucky to have made the investment. Bank of Shanghai is much smaller than its hometown rival, Bank of Communications, but its importance cannot be neglected, given the strategically important role of Shanghai as the country's financial capital.
In fact, when HSBC announced it would invest in Bank of Shanghai in late 1999, making it one of the first foreign banks to have a local partner in China, the event made headlines in all major Chinese newspapers and won the blessings of the top leadership in Beijing.
Fourteen years on, the current chief executive, asked about HSBC's relations with its local partners in China, replied: "We have often said Bank of Communications is our strategic key holding in China, and obviously Bank of Shanghai is not."
When Gulliver was asked further if HSBC would sell its stake in Bank of Shanghai, he said: "But it is only about US$500 million to US$600 million, and that is immaterial to the group."