While cutting costs elsewhere in its business, HSBC has injected Rmb2.8 billion ($442 million) into its operations in China, underlining the bank’s positive outlook on the world’s fastest-growing economy.
The investment, which is settled in renminbi, has boosted HSBC China’s registered capital to Rmb10.8 billion, which is the biggest capital base of any foreign bank in the country. HSBC has also become the first foreign bank allowed to inject new capital using the Chinese currency, under a pilot programme announced by the government in August.
“I’d like to thank the Chinese government for enabling us to take this pioneering step,” said Peter Wong, chief executive of HSBC Asia-Pacific, in a statement. “This is an important milestone for us because China is one of our first home markets, and we are very appreciative of the opportunity this provides to increase our capacity for expansion. It’s also a milestone in the internationalisation of the renminbi, demonstrating the currency’s readiness to be a medium for cross-border investment as well as trade.”
The British bank currently has more than 100 outlets across 29 major cities in China, and the size of its latest investment in the mainland signals a commitment to further expansion.
HSBC is not alone in that. In an environment of increasing funding constraints, foreign banks operating in China are surprisingly confident about their prospects, according to a survey by PricewaterhouseCoopers (PwC).
“In fact, [foreign banks in China] expect revenue to continue to grow over the next three years. Their optimism stems from the continued opening up of the Chinese economy, and its transition towards a convertible currency,” the firm said.
PwC itself is also optimistic. The firm is planning to more than double its workforce in China and Hong Kong during the next five years by adding 15,000 staff nationwide. The hires will include both graduates and experienced professionals across all lines of the businesses. PwC currently employs 14,000 people in Greater China and Singapore, including 620 partners.
Globally, HSBC’s outlook is less bullish. The lender has said it will cut around 30,000 jobs worldwide during the next two years, including 3,000 in Hong Kong, where the bank is one of the biggest employers with 23,000 staff in total.
Meanwhile, Chinese banks are accelerating their expansion overseas in an effort to follow their clients abroad.
“There is less fluidity in the European market — some companies in the Asia-Pacific region may now have difficulty obtaining financing, which gives us a chance to do business with them,” said Xiao Gang, chairman of Bank of China (BOC), to Chinese media at the Asia-Pacific Economic Cooperation CEO Summit, which kicked off last week in Hawaii.
However, like other Chinese banks’ overseas operations, BOC found its overseas branches are less profitable than its domestic ones, due to the rapid growth in the value of the renminbi.
