HSBC expands China green finance and bonds teams in funds – sources

HONG KONG/LONDON, July 13 (Reuters) – HSBC (HSBA.L) is expanding its green finance and bond teams in China to satisfy increasing demand, according to two persons familiar with the topic, as Europe’s largest bank continues to expand in the nation amid geopolitical tensions.

Last week, HSBC chairman Mark Tucker met with Chinese regulatory authorities in Beijing to help clear the way for the bank to boost growth in China, notably in the country’s $3.9 trillion fund market.

Tucker told officials that the “ice-breaking” mentality used by British businesses in the past will assist the UK and China overcome hurdles and geopolitical issues, according to a bank statement released on Wednesday.

Following pressure from its largest Chinese investor, Ping An Insurance (601318.SS), HSBC has committed to bolstering its money-making Asia division while selling underperforming units overseas.

According to the first of two sources and a third person with knowledge of the topic, HSBC will make significant investments in its asset management business in China this year, including the formation of new teams dedicated to green assets and fixed income. The investments were not valued, according to the sources.

According to the second source, the lender is considering issuing carbon offset products to customers following an increase in client inquiries over the last year, particularly from Western multinational corporations under pressure to achieve rigorous emissions standards.

HSBC did not respond to a request for comment.

Climate change has also become a major concern for domestic Chinese companies. After President Xi Jinping declared that China will achieve “carbon neutrality” by 2060, the world’s largest greenhouse gas emitter saw its climate fund assets skyrocket from a low foundation.

According to Morningstar data, such funds had $34 billion in assets as of September of last year.

HSBC has increased its presence in China, despite complaints from some Western lawmakers about the bank’s behavior in the country.

Tucker discussed the bank’s planned expansion in asset and wealth management with Beijing officials, according to a release from the municipal government, which also stated that foreign engagement in green finance was welcome.

In March, HSBC CEO Noel Quinn paid his first visit to Beijing since the COVID-19 outbreak, and a key official assured him that China “welcomed an expansion of HSBC’s investment in the country.”

According to the first source, the fall of Credit Suisse as an independent bank following its emergency takeover by rival UBS earlier this year creates chances for rivals to increase market share in asset and wealth management in Asia.

According to Reuters, UBS has postponed its own intentions to establish a new fund arm in China and has decided to retain ownership in a huge fund joint venture formed by its Credit Suisse acquisition.

HSBC said last week that it was “open to opportunities” to develop its business in China, following the sale of a 31% stake in its HSBC Jintrust Fund Management joint venture by its local partner.

According to the first source, HSBC’s new fixed income division in China would initially consist of five people in response to increased client demand for bonds.

HSBC’s green finance push builds on the bank’s January acquisition of Hong Kong-based specialist asset management Green Transition Partners, when it announced plans to expand its green infrastructure services across the Asia-Pacific region.