HSBC Bank (China) Company Limited, the locally incorporated unit of The Hongkong and Shanghai Banking Corporation Limited, has started operations throughout mainland China.
Its registered capital of RMB8 billion (US$1 billion) is believed to be one of the largest of any of the foreign banks undergoing local incorporation in China.
Under Chinese financial sector reforms which went into force last December, foreign banks operating in China have the same preferential legal and tax treatment given to domestic banks. The changes mean that foreign banks already operating in China can offer yuan-denominated services to local customers, putting them on an equal footing with domestic banks. The new laws honour a commitment given to the World Trade Organisation that China would open its financial services markets to foreign banks.
Moody's has assigned a credit rating on HSBC Bank (China) Company Limited for local and foreign-currency deposit ratings of A2 (long-term) and Prime-1 (short term), with a positive outlook on the deposit ratings. The ratings are the highest possible for a locally incorporated bank in China.
The HSBC Group's total investment in China exceeds US$5 billion, including its organic operations and its investments in Chinese financial institutions. Pre-tax profit from mainland China operations including investments more than doubled in 2006 to US$708 million, making China the single-largest country contributor to the Group's Asia-Pacific earnings excluding Hong Kong.
The new entity currently has more than 3,000 staff, up from the 2,700 employed at HSBC's China operations at year-end 2006. The Bank has the largest network of any foreign bank in China with 35 outlets, comprising 14 branches and 21 sub-branches, plus an ATM network of more than 80 machines across the country.
HSBC Bank (China) Company Limited is a 100% owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited, which is in turn a 100% owned subsidiary of HSBC Holdings plc.
Vincent Cheng, Chairman of HSBC Bank (China) Company Limited and its parent, said: "Today we open a new chapter in the Bank's 142-year history in China and underline HSBC's long-term commitment to the country. Local incorporation supports our two-pronged China strategy, increasing our ability to achieve organic expansion and creating greater opportunities for co-operation with our strategic partners. My combined role as Chairman of both the new entity and its parent company illustrates the importance we place on the China market as part of the Group's overall strategy for the Asia-Pacific region."
Richard Yorke, President and Chief Executive Officer of HSBC Bank (China) Company Limited, added: "This is a historic milestone for the Bank and will allow us to continue to expand both our geographic reach and the product range we can offer to our customers. We are ready to roll out renminbi services to domestic individuals upon approval from our regulators and will look to open new service outlets in the near future. More than 1,000 new staff will be recruited to support our expansion plans this year."
HSBC Bank (China) Company Limited has incorporated the previous mainland China offices of The Hongkong and Shanghai Banking Corporation Limited. The latter retains a branch in Shanghai solely to conduct limited foreign currency wholesale business.
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