People
&Markets
HSBC snubbed in China rate reform
Expanded panel for loan benchmark includes Citi, StanChart
China has left out HSBC from the expanded
panel of banks that will determine its new
benchmark lending rate, in an apparent
snub for the Anglo-Asian lender.
The People’s Bank of China said on
August 17 that it would scrap its current
system of setting the benchmark rate on
a daily basis in favour of a more market-
driven alternative, referred to as the loan
prime rate.
HSBC’s surprise omission from the panel,
which includes CITIGROUP and STANDARD
CHARTERED, is a blow for a bank that has
staked its growth ambitions on China.
The apparent snub comes as relations
between the China-focused lender and
Beijing have reportedly become strained
because of HSBC’s cooperation with US
authorities over the arrest of Huawei’s chief
lNANCIALûOFlCERû-ENGû7ANZHOU
The surprise ousting of CEO John Flint
earlier this month after just 18 months in
the job has sparked speculation of a link
to the Huawei spat, a suggestion HSBC has
denied.
The bank’s Greater China chief executive
(ELENû7ONGûSUBSEQUENTLYûRESIGNEDûAFTERû
more than 25 years with the bank. A
spokesperson said at the time that her
departure was unrelated to Flint’s.
Last Tuesday, HSBC was named in
documents released after a hearing in the
British Columbia Supreme Court, where
(UAWEIû#&/û-ENGûISûlGHTINGûEXTRADITIONû
to the US, as one of at least four banks that
had relationships with Huawei when Meng
and others allegedly misled them aboutthe company’s business dealings in Iran,
despite US sanctions.
Citigroup and StanChart were also
named in the documents, alongside BNP
Paribas.
The singling out of HSBC comes at a
DIFlCULTûTIMEûFORûTHEû!NGLO
!SIANûLENDER û
which is faced with headwinds in both its
major hubs - the increasing likelihood of a
no-deal Brexit in the UK and months of civil
unrest in Hong Kong that have plunged the
city into its biggest crisis since the transfer
of sovereignty to China in 1997.
“HSBC is committed to the development
OFû#HINASûlNANCIALûMARKETS vûAû
SPOKESPERSONûFORûTHEûBANKûSAIDûh7EûHAVEû
participated in many initiatives to enhance
THEûEFlCIENCYûOFûlNANCIALûMARKETSûANDû
will continue to seek opportunities to
CONTRIBUTEûTOûlNANCIALûSECTORûREFORMSû7Eû
welcome the new loan prime rate, which
WEûBELIEVEûCANûBETTERûREmECTûINTERBANKûLIQUIDITYûANDûFUNDINGûCOSTSûFORûLENDINGûINû
THEûREALûECONOMYvTRADE WAR
The move towards a more market-driven
lending rate comes as China is seeking to
stimulate the economy and lower funding
COSTSûFORûBORROWERSûTOûCOUNTERACTûmAGGINGû
domestic demand and trade tensions with
the US.
“Since policymakers are keen to lower
the funding cost in the real economy, both
LPR and the average loan rate will likely
DROP ûALBEITûMODESTLY vûSAIDû-ACQUARIEû
Group analyst Larry Hu. “Otherwise, they
COULDûPUTûMOREûPRESSUREûONûBANKSv
The PBoC actually started publishing the
one-year LPR, which is calculated based
on the lowest rate banks offer to their
best clients, in 2013, although this has
tended to move in tandem with the PBoC’s
benchmark rate and has been widelyTOP STORY REGULATIONWho’s moving where...
HSBC Greater China
chief executive Helen
Wong is leaving, the
second recent senior
departure after the
ousting of group CEO
John Flint.
Wong has decided
to leave to pursue an
external opportunity,
a spokeswoman
said, adding that her
role will be dropped
and the GreaterChina region, which
includes Hong Kong
and Taiwan, would be
run by the respective
country heads.
Wong joined HSBC
in 1992 and rose to
become its China CEO
before being given
the newly created role
of Greater China chief
in 2015. ALLIANZ GLOBAL
INVESTORS has
bolstered its private
credit team in Asia.
Paul Schrecongost and
Siddharth Rao have
both joined as senior
portfolio managers.
Schrecongost spent
10 years at Nomura
having earlier worked
at Lehman Brothers.
Rao joins from
Edelweiss FinancialServices. He has also
worked at Fitch.
Both Rao and
Schrecongost are
based in Singapore
and report to Sumit
Bhandari, who was
brought in last year
from Abraaj Group, a
Dubai-headquartered
private equity
company, to lead the
private credit team
in Asia.RATE REFORMS
1Y PBOC LENDING RATE VS 1Y LOAN PRIME RATE (%)Source: Refinitiv4.4.5.5.6.6.Oct 13 Oct 14 Oct 15 Oct 16 Oct 17 Oct 18 Oct 19
PBOC 1-year rate 1-year LPR