HSBC intends to tighten risk management in its Hong Kong unit Hang Seng Bank.
The mentioned decision of the financial institution is due to concerns about the high probability of an increase in the number of bad loans against the background of the deteriorating economic situation in China and the deep crisis in the real estate sector of this country. The relevant information was published by the media with reference to anonymous insiders who were aware of the motives of HSBC’s actions.
As part of the change in the relationship process with the head office, Hang Seng’s top managers will be more involved in the parent company’s discussions on the implementation of risk management activities in the Asia-Pacific region. Insiders note that these discussions relate to corporate and retail business, wealth, and private banking.
HSBC’s decision is also concerned with an increase in its focus on Asia. The corresponding change in the financial institution’s strategy coincided with a period of significant economic difficulties in China. Beijing is currently trying to counter such a negative reality as the stock market collapsing. Also, defaults on the debts of Chinese developers have provoked widespread concern about the general state of the world’s second-largest economy.
The crisis in the real estate sector on the mainland, which has been moving from one deterioration to another since 2021, has caused an increase in the share of bad loans to Hang Seng.
A plan to share the experience and best practices of HSBC’s risk management operations in the Asia-Pacific region with Hang Seng is still being discussed. Insiders say that it is highly likely that this plan will be implemented in the current year.
As we have reported earlier, HSBC Completes Sale of Its French Retail Banking Business.
