It hasn’t been a great year for overseas investment banks in mainland China. As we noted earlier this month, just six foreign firms feature in the top-20 banks for China IBD revenue so far this year, compared with nine in the same period in 2014.
Most of those that remain in the top-20 have fallen down the rankings – only UBS bucked the trend, rising from 8th to 5th position. The longer-term picture isn’t much better – the minority-ownership joint ventures that overseas banks run in China have struggled for profitable for more than 10 years.
Given their growing dominance in the league tables, local banks (led by Citic) are increasingly where you’d want to work to capture the larger deals in China. However, HSBC is now trying to fight back – at least in debt capital markets. Subject to regulatory approval, it’s partnering with Shenzhen Qianhai Financial Holdings, the state investment fund unit of a development zone near Hong Kong, to increase its share of China’s $4 trillion onshore bond market.
As Reuters points out, HSBC’s deal comes with unique advantages over earlier joint ventures set up by the likes of Credit Suisse, Deutsche Bank and Goldman Sachs: its partner is essentially the Chinese government and it’s not restricted by the normal 49% maximum ownership cap.
“The other banks have had a 10-year headstart and not gotten very far, and I think HSBC could be the tortoise to their hares and get ahead despite a slower start,” Keith Pogson, Asia head of financial services at EY, told Reuters. If you work in Chinese DCM, you now know where to send your CV.
Meanwhile:
Mother of arrested Chinese fund manager Xu Xiang has her shares frozen. (WSJ)
And the latest bank to set up an innovation lab is…UOB. (Business Times)
It’s not a good time to be working for a small Chinese bank. (SCMP)
UBS and J.P. Morgan to invest in Postal Savings Bank of China. (Finance Asia)
Korea Investment Corporation boss reportedly resigns. (Asian Investor)
Singapore gets more yuan products. (Straits Times)
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