May 9, 2023 7:17 AM GMT+7
By Selena Li
HSBC's
logo is seen on its headquarters in Hong Kong, China August 4, 2020.
REUTERS/Tyrone Siu/File Photo
HONG KONG, May 8 (Reuters) - HSBC (HSBA.L) has agreed to
buy out its China fund management joint venture partner, two people familiar
with the matter said, as the Asia-focused bank pushes ahead with expansion in
the world's second-largest economy.
HSBC, which currently owns a 49%
stake in HSBC Jintrust Fund Management, has signed an agreement with Shanxi
Trust under which the Chinese state-owned company will sell its 51% holding in
the joint venture to the bank, said the sources.
The transfer is, however, subject to a public auction of the
shares and regulatory review and approval, said the sources, who declined to be
identified as they were not authorised to speak to media.
If approved, Europe's biggest
bank by assets, which makes the bulk of its revenue and profit in Asia, will
expand its presence in the $3.8 trillion fund management market in China.
A spokesperson for HSBC in Hong
Kong declined to comment. Representatives for Shanghai-headquartered HSBC
Jintrust and Shanxi Trust did not immediately respond to a request for comment.
It was not immediately clear how
much HSBC will pay Shanxi Trust to wholly own HSBC Jintrust, which, according
to the joint venture's website, had $7.7 billion in funds under management as
of end-March.
HSBC's move to boost its stake in
the fund venture is the lender's latest to expand its presence in China.
The London-headquartered bank
converted its China insurance joint venture to a wholly-owned subsidiary in
2021, and boosted ownership of its China securities joint venture to 90% last
year.
HSBC has deployed billions of
dollars in China in the last few years as part of an Asia pivot, boosting its
market share across banking, insurance and securities businesses in the
country's $57 trillion financial sector.
China, including Hong Kong and
the mainland, contributed around 44% of HSBC's profit in 2022.
CHINA INVESTMENTS
HSBC Chief Executive Noel Quinn
visited Beijing in March, when a top official told him China "welcomed an
expansion of HSBC's investment in the country".
The bank's signing of the deal
for the China fund business comes as it contends with a months-long campaign
from shareholder Ping An to hive off its Asia business. HSBC managed to defeat a break-up bid at
Friday's annual investor meeting.
HSBC joins a string of global
financial companies including Manulife (MFC.TO), JPMorgan (JPM.N) and Morgan
Stanley (MS.N) in taking
advantage of the removal of a foreign ownership cap in 2019 to boost stakes in
Chinese fund ventures.
HSBC Global Asset Management, the
bank's fund business unit, is planning an accelerated push to win regulatory
approval to bring the ownership change into effect, the sources said.
However, before turning to the
regulators, it must cut or offload a majority stake indirectly owned via its
subsidiary Hang Seng Bank in 70%-controlled fund unit Hang Seng Qianhai Fund
Management, the sources said.
Domestic and foreign firms are
subject to China's "One Majority, One Minority" ownership rule, which
means they can't have more than two fund units in China and only hold majority
control of one.
Reporting
by Selena Li; Editing by Sumeet Chatterjee, Kirsten Donovan
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