HSBC seeking investment banking joint venture in China

HSBC Holding Plc, Europe’s largest bank, is in talks to set up an investment banking joint venture in China, a senior bank executive said, adding that acquisition prospects in Asia are too expensive and that the bank will focus on organic growth.

The bank is in talks with potential partners to set up an investment banking joint venture, said Vincent Cheng, HSBC executive director and chairman for Asia-Pacific.

The move would allow the bank to expand into China’s domestic securities and debt markets.

“We have many networks in Asia, so there is no push for us to buy expensive assets in the region,” Cheng said yesterday.

HSBC said Monday its first-half profit halved from a year ago to $5 billion due to rising bad debts.

Still, its stock jumped 6.6 percent to HK$82.85 yesterday as investors reacted to news that its profit was better than an average forecast of $4.9 billion because of cost controls and lower credit charges.

HSBC Asia will focus on organic growth, said Cheng, who added that business will improve in the second half and that profits from Hong Kong will increase.
 
“Emerging markets’ contribution will account for about 60 percent of the total after the U.S. market returns to profit,” Cheng said.

HSBC plans to seek a group listing in China’s Shanghai Stock Exchange and has started the IPO process. The timing for such a listing depends on China’s regulators, Cheng said.

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