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HSBC reaches US$5 billion in mainland China investment

HSBC reaches US$5 billion in mainland China investment

(10 June 2005 – Hong Kong) HSBC is tipped to take one fifth of the shares that will become available when China’s Bank of Communications launches its initial public offering. This means HSBC’s stake in what is China’s fifth largest bank will stay at just under 20 percent. The bank’s overall investment in mainland China will rise to US$5 billion.

HSBC Asia Pacific chief executive Michael Smith said the bank’s return on equity for its mainland China network would exceed 15 to 20 percent. He also warned that it was difficult to evaluate the profitability of acquired assets in China.

Last April, HSBC denied it was seeking to take a stake in China Construction Bank, saying it had made several investments in financial services companies in mainland China and did not want to stretch its resources by adding to these acquisitions.

In January, HSBC was given regulatory approval to extend its branch network in western China, including upgrading its offices in Chongqing and Chengdu into major branches offering foreign currency services.

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