HSBC to improve ties with Hong Kong unit Hang Seng to mitigate risk, say sources
- Hang Seng’s top executives will be more closely involved in parent HSBC’s Asia-Pacific risk management discussions, sources say
- Hang Seng, 62 per cent owned by HSBC, saw its gross impaired loans and advances ratio rise to 2.85 per cent at the end of June versus 1.92 per cent a year earlier
HSBC plans to tighten risk management at Hong Kong unit Hang Seng Bank because of worries about a potential rise in bad loans amid growing economic headwind and property sector crisis in China, said two people with knowledge of the matter.
Hang Seng’s top executives will be more closely involved in its parent’s Asia-Pacific risk management discussions regarding corporate, retail, wealth and private banking, the people said.
The initiative comes as HSBC’s pivot towards Asia coincides with economic turmoil in mainstay market China, where a stock rout and developer debt defaults have triggered concern about financial sector health in the world’s second-biggest economy.
Exposure to the mainland property sector, which has lurched from one crisis to another since 2021, has pushed up Hang Seng’s bad-loan ratio in recent quarters.
The plan to share expertise and best practices by HSBC Asia Pacific’s risk management operations with Hang Seng is still under discussion but is likely to be implemented this year, said one of the people.