HSBC Trains Sights On China Despite Slowdown

HSBC is to reinforce its commitment to the strategy it outlined last year by signing a deal to sponsor a high-speed rail-link between two cities in the Pearl River Delta, one of China's most important economic regions.

Sky News understands that Stuart Gulliver‎, HSBC's chief executive, will unveil the agreement on Wednesday in Guangzhou in southern China, close to the country's border with Hong Kong.

The sponsorship deal will see the bank's brand promoted on the high-speed trains, an association that will echo its long-running marketing campaign at international airports around the world.

The value of the agreement, which is initially for one year with an option to extend, was unclear, but it has been struck at an important time for HSBC and its chief executive.

In its annual results in February, HSBC reported that the slowdown ‎in China's economy had contributed to a 14% fall in pre-tax profit in Asia in the fourth quarter of the year.

Despite the decline in Chinese GDP, which contributed to a slump in global equity markets earlier this year, HSBC still made more than $15.7bn in pre-tax profit in Asia in 2015.

‎Mr Gulliver said at the time of the results that the bank remained irrevocably committed to the region, pointing to an agreement it signed last year to form the first majority foreign-owned securities company in mainland China among a number of new initiatives there.

HSBC‎'s 'pivot to Asia', announced to the City last June, involves redeploying capital to the region over the coming years to enable HSBC to capture trade flows involving faster-growing economies.

‎The bank says it is determined to accelerate its focus on the Far East (Kuala Lumpur: 5029.KL - news) amid more sluggish growth in other markets in which it has a big presence, including the UK and US.

It (Other OTC: ITGL - news) did, however, decline the chance to cement its ties with Hong Kong, its former home, even more deeply when it said it would remain headquartered in London following a ten-month review.

Last month, HSBC said it had begun a process to identify a successor to Douglas Flint, its chairman, who has had a long executive career at Europe's biggest lender.

Under the leadership of Mr Flint and Mr Gulliver since 2011, HSBC has shed tens of thousands of jobs, exited dozens of countries and significantly reduced risk-weighted assets, but the moves have had frustratingly little impact on its share price.

‎The bank has also been caught up in the same trading and mis-selling scandals as competitors, costing it billions of pounds in fines and compensation payments.

Last year, it was ‎engulfed in scandal amid allegations that its Swiss private bank helped wealthy clients evade taxes, with Mr Gulliver quizzed by MPs on his own financial arrangements.

The City regulator subsequently ended an examination of the issue without taking further action.