HSBC: Returning to its Chinese roots

In Banks, China on 18/12/2010 at 7:03 am

Remember the “S” stands for “Shanghai” and “H” for Hongkong.

Growth in China has averaged around 10 percent a year for the last decade and shows little sign of slowing. As trade flows with the rest of the world increase — HSBC says they will reach $5 trillion by 2015, which means growth of 13 percent a year — more of China’s cross-border trade will be settled in yuan.

On paper, HSBC is well placed to take a good chunk of business in that yuan-denominated trade. It is often one of the first foreign entities to win key licenses in China. It was the first to settle a cross-border yuan trade last year, the first to handle a yuan-denominated interest rate swap in Hong Kong in October, and it became the first international bank to complete yuan settlements in six continents with a deal in Brazil last month. …

And while HSBC may have so far missed out on the big name bond deals, bankers point to trade financing and a more modest recent transaction — financing for auto maker SAIC’s $500 million investment in Detroit’s General Motors — as examples of where the bank is strong. HSBC stepped in quickly with the credit facility after Chinese authorities wavered on allowing state-backed SAIC to invest in GM’s IPO, people familiar with the deal said. It was a deal laced with symbolism: a Chinese firm becoming a cornerstone investor in America’s flagship auto-maker GM in the world’s biggest IPO, with the world’s two most powerful governments involved in the talks. “That was a big deal … “.

Reuters article. Warning VV long

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