Europe’s biggest bank has announced plans to become the first foreign-owned company to be listed on Shanghai’s stock exchange.

The Shanghai Stock Exchange (SSE) is expected open up its listing to foreign-owned companies next year.
The Hong Kong and Shanghai Banking Corporation - or HSBC - was established in Asia in 1865.
In 1990 it was incorporated as a company in the United Kingdom.
Now, the bank has kick-started a plan to return to its roots by becoming the first foreign-owned company to be floated on the SSE when it opens its listings to overseas-owned enterprises next year.
The move coincides with HSBC’s plans to expand its operations significantly in Asia as it tries to recover from massive losses in the United States over the past 12 months.
---------Symbolic move
Sunil Garg, an Hong Kong based analyst with JP Morgan, says the move is more a symbolic statement of confidence, rather than a capital-raising exercise.
“It’s significant in that respect, but whether you are first or second or the tenth - I mean financially is that going to make a dramatic difference? Probably not. So I think the whole listing is more about symbolism,” he said.
The bank has reportedly hired China International Capital Corp and Citic Securities to advise on their initial public offering in Shanghai.
Finance Professor Raymond So of the Chinese University of Hong Kong says the biggest challenges facing companies wanting to be listed on the SSE will be the tight capital account controls, and the fact that yuan is not fully convertible.
“If companies want to get a listing status in Shanghai, that means the money they invested will only be used in China, to expand their Chinese business. However this could be a very good opportunity for other companies to get a step in the Chinese market,” he said.
Which is exactly what HSBC is planning on doing.
Aside from plans to be listed on the SSE, the bank plans to add ten more branches in China by the end of this year.
It has invested more than $US5 billion in China over the past eight years.
HSBC is still reeling from massive losses incurred from sub-prime mortgage investments in the United States over the past 12 months.
Is has reportedly seen its US pre-tax profits fall by 51 per cent for the first half of this year, from $US10.2 billion to $US5 billion.
-----------Asian strategy
Mr. Garg, the JP Morgan analyst, says it will be some time before HSBC can regain those losses through operations and investments in Asia.
“Over the next perhaps three to four years you will see the Asia Pacific region rivaling that of the Europe operations in terms of profit contribution. So it will take a little bit of time to get that up to speed,” he said.
“Is China on its own going to undo a huge amount of write-offs that they have had in the US? I think we are still some years away from that because you have to take into account the very large magnitude of losses in the US.”
HSBC reportedly earned 52 per cent of its total global earnings in Asia in the first half of this year.
Mr. Garg says China is only one country in Asia where HSBC is increasing its presence.
“You know very clearly they are very focused in terms of their Asian expansion. If you think of it in geographic terms I think the areas they are very focused on is China, India, Indonesia and Vietnam,” he said.
---------Jobs created
HSBC has said the opening of ten new branches will create 1,000 new jobs in China.
Mr. Garg says the Asian expansion is not good news for the 12,000 HSBC workers around the world who have lost their jobs during the economic downturn.
“It’s a very different set of jobs that are lost,” he said.
“If they have had to reduce the size of their operations in the U.S., are they going to relocate those people to Asia? The answer is probably not.”