In a bid to expand its operations in China, global banking giant HSBC is set to buy out its joint venture partner’s holdings from HSBC Jintrust Fund Management.
Currently, HSBC holds a 49% stake in the fund management venture, with Shanxi Trust holding the remaining 51%. Insiders say that both parties recently signed an agreement wherein Shanxi Trust will sell its holdings to HSBC.
However, the amount HSBC is set to pay its joint venture partner has yet to be disclosed through HSBC Jintrust Fund Management had around $7.7 billion in funds under management as of the end of the first quarter of this year.
It should be noted, however, that this transaction is dependent on the results of a public auction of the aforementioned shares, as well as the review and approval of the relevant Chinese government regulator. Should it push through, HSBC effectively expands its presence in China’s $3.8 trillion fund management market.
Europe’s Biggest May Soon Be China’s Largest
Currently headquartered in London, HSBC is currently Europe’s largest banking firm in terms of assets, and its plans to expand its presence in China may very well pay off.
Back in 2021, the bank converted its Chinese joint venture in the insurance sector to a fully-owned subsidiary. Last year, it upped its ownership of its securities venture in the country to around 90%.
It should be noted at this point that HSBC has invested several billion dollars in China over the past few years as it set its sights on a stronger presence in the Asian banking sector. It has also boosted its Chinese market share in the fields of insurance and securities, deriving around 44% of its 2022 profits from China and Hong Kong.
Interesting Developments
News of the Jintrust takeover came just over a month after HSBC CEO Noel Quinn’s visit to Beijing back in March where a top government official remarked that China welcomed the further expansion of the bank’s investment into the country.
However, the deal also came at a time when HSBC found itself battling a long-running campaign on the part of shareholder Ping An to hive off its business in Asia. In fact, the bank was able to thwart a break-up bid during its annual investor meeting on Friday, May 5th.
