HSBC looks at maintaining Bocom stake

13 April 2007

HSBC has announced it is investigating how to retain its shareholding in Chinese bank Bank of Communication (Bocom) in response to the bank's intention to pursue a share issue.

Bocom has announced it is go ahead with a share issue in July, which would significantly reduce HSBC's holding.

A spokesman for HSBC said: "BoCom is supportive of HSBC maintaining its 19.9 per cent shareholding after BoCom's listing on the A-share market. 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 per cent to 40 per cent once proposed legislation to liberalise 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 eight per cent stake.

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