HSBC is investigating how to retain its shareholding in the Chinese Bank of Communication (BoCom) in response to the bank’s intention to pursue a share issue.
BoCom has announced it is going ahead with a share issue in July, which would significantly reduce HSBC’s holding.
“BoCom is supportive of HSBC maintaining its 19.9 per cent shareholding after BoCom’s listing on the A-share market,” an HSBC spokesperson said. “HSBC endorses the timing of BoCom’s listing and both parties are exploring appropriate means to retain HSBC’s current level of shareholding.”
News of HSBC’s plans comes after BoCom was recently reclassified by Chinese regulatory bodies as a significant state-owned bank, a change that exempts the bank from legislation allowing foreign investors to up their stakes in domestic banks and effectively stymies HSBC’s expansion plans.
It is thought that HSBC was seeking to increase its stake from 19.9 percent to 40 percent once proposed legislation to liberalize banking laws is passed.
Speculation is now rife that HSBC will look to pursue increased market share in the region by acquiring a larger stake in Bank of Shanghai, in which it currently holds an 8 percent stake.