HSBC Bank (China) has a registered capital of Rmb8 billion, (just under $1 billion) bringing HSBC's total investment to $5 billion.
Previously, the bankÆs branches in China were part of the Hong Kong and Shanghai Banking Corporation, which is incorporated in Hong Kong, and thus not treated on a par with mainland banks. The Hong Kong and Shanghai Banking Corporation is the founding and principal member of HSBC Group, according to the press release which announced the news.
As a result of that earlier status, the rate at which HSBC (and other foreign banks) could open branches in China was restricted by having to apply for permission for each city HSBC wanted to open a branch in.
However, with 2007 being the year in which China is committed to give equal treatment to foreign and domestic banks as agreed to by its World Trade Organisation accession agreement, foreign banks are now able to incorporate locally.
The change means that HSBC Group can now accelerate the pace at which it builds a branch network in China.
One of the main benefits of being incorporated in China means that the bank will be able to extend its services to retail customers with assets of less than Rmb1 million û the current floor for customer assets as stipulated by the Chinese regulators to protect its own banks.
Being able to access ChinaÆs retail customer base for local currency services signifies that HSBC has finally reached theoretical parity with domestic banks, six years after the country joined the WTO.
ôWe will be going for relatively high-end customers through our own branded branches, in contrast to the customers we can access through our partnership with Bank of Communications,ö says one source close to the bank.
HSBC Bank (China) currently comprises 14 branches, but wants to raise that total to 30 by the end of the year. It also wants to add 1,000 new staff to its existing staff, which numbers 3,000.
However, each branch will need to be capitalised to the tune of Rmb100 million, signifying that the era of high investment is far from being over for HSBC.