HSBC Holding Plc, Europe's biggest bank, is in talks to set up an investment banking joint venture in China, a senior bank executive said, adding that acquisition prospects in Asia are too expensive and that the bank will focus on organic growth.
The bank is in talks with potential partners to set up an investment banking joint venture, said Vincent Cheng, HSBC executive director and chairman for Asia-Pacific.
The move would allow the bank to expand into China's domestic securities and debt markets.
We have many networks in Asia, so there is no push for us to buy expensive assets in the region, Cheng told Reuters in an interview on Tuesday.
Cheng said HSBC Hong Kong has enough capital for acquisitions and had looked into some of Royal Bank of Scotland's Asian assets but found, in general, that Asian assets were too expensive.
Australia and New Zealand Banking Group Ltd said earlier on Tuesday that it had agreed to buy some Asian units from RBS for about $550 million.
On Monday, HSBC said its first-half profit halved from a year ago to $5 billion due to rising bad debts.
Still, its stock jumped 6.6 percent to HK$82.85 on Tuesday as investors reacted to news that its profit was better than an average forecast of $4.9 billion because of cost controls and lower credit charges. It beat the benchmark Hang Seng Index .HSI, which was virtually unchanged.
HSBC Asia will focus on organic growth, said Cheng, who added that business will improve in the second half and that profits from Hong Kong will increase.
The economies of many Asian markets, including Singapore, South Korea and China had bottomed out in the second quarter and should improve for the rest of the year, he said.
Emerging markets' contribution will account for about 60 percent of the total after the U.S. market returns to profit, Cheng said. This is our target and, of course, we would not mind if the portion from emerging markets is bigger, he added.
Asia contributed about 90 percent of the group's profit in the first half.
HSBC plans to seek a group listing in China's Shanghai market and has started the process for an IPO. The timing for such a listing will depend on China's regulators, Cheng said.
HSBC has said it aims to be the first foreign bank to be listed in China.
(Editing by Chris Lewis and Ken Wills)