HSBC launches private banking in China

Written by Reuters | Shanghai, March 31: | Updated: Mar 31 2008, 16:42pm hrs
HSBC Holdings Plc, Europe's largest lender, launched private banking services in China on Monday as foreign banks including Citigroup target the country's fast-growing market for services to wealthy clients.

Chinese regulators had given HSBC approval to offer private banking services in Shanghai, Beijing and the southern city of Guangzhou, the bank said.

It will target individuals with a minimum net worth of $10 million, it said, while the minimum initial deposit for an account will be $1 million.

HSBC and other foreign lenders are targeting China's rapidly growing wealthy class, as full deregulation of the country's banking industry has allowed them to conduct local-currency business with Chinese individuals.

The British bank forecast that by 2011 there would be 16 million high net-worth individuals in China with $6.2 trillion in total assets.

HSBC China Chief Executive Richard Yorke told a news conference that China's macroeconomic tightening would not hurt the bank's business and that the country remained on track for strong growth despite the subprime debt crisis rocking the U.S. economy.

"We are very comfortable with the amount of lending we are able to make, and we are working within the amount of lending we are given. Overall the tightening is a good thing for the economy and our overall business will not be affected," he said.

He said the company planned to add about 2,000 to 2,500 staff this year in mainland China.

"There will not be any lessening of our commitment to grow in China," he said.

Annual economic growth of more than 10 percent has created more than 345,000 U.S.-dollar millionaires in mainland China, according to a Merrill Lynch report.

"The creation of wealth in China is a unique phenomenon in that greater wealth is being generated by a relatively younger age group as compared to the rest of the world," Monica Wong, HSBC private bank chief executive for Asia, said in a statement.

HSBC posted more than $1 billion in pretax profit in China last year, including strategic investments. HSBC holds a nearly one-fifth stake in China's Bank of Communications and is the largest single shareholder in Ping An Insurance

HSBC said on Monday that its China unit earned a pretax profit last year of $165 million, excluding strategic investments, up 28.7 percent from the previous year.

HSBC rivals CitiBank and Standard Chartered have already started private banking businesses in China, while Bank of East Asia has said it planned to launch such services in the second quarter.

Local banks, including Industrial and Commercial Bank of China (ICBC) and Bank of Communications, have also joined the competition to offer services for wealthy Chinese clients.