Exclusive-HSBC to improve ties with Hong Kong unit Hang Seng to mitigate risk, say sources
By Sumeet Chatterjee, Engen Tham and Selena Li
HONG KONG/SHANGHAI (Reuters) —
HSBC plans to tighten risk management at Hong Kong unit Hang Seng Bank due to worries about a potential rise in bad loans amid growing economic headwind and property sector crisis in China, said two people with knowledge of the matter.
Hang Seng's top executives will be more closely involved in its parent's Asia-Pacific risk management discussions regarding corporate, retail, wealth and private banking, the people said.
The initiative comes as HSBC's pivot toward Asia coincides with economic turmoil in mainstay market China, where a stock rout and developer debt defaults have triggered concern about financial sector health in the world's second-biggest economy.
Exposure to the mainland property sector, which has lurched from one crisis to another since 2021, has pushed up Hang Seng's bad loans ratio in recent quarters.
The plan to share expertise and best practices by HSBC Asia Pacific's risk management operations with Hang Seng is still under discussion but is likely to be implemented this year, said one of the people.
Both people declined to be identified as the matter is not public.
«HSBC recognises the importance of a strong risk culture. Active risk management helps us to achieve our strategy, serve our customers and communities and grow our business safely,» said a spokesperson for the bank.
«HSBC Group entities stand to benefit from the strengths of the Group.»
Hang Seng, 62% owned by HSBC, did not immediately respond to a request for comment.
A slowing Chinese economy, protracted property sector crisis and local government debt travail have raised concern about exposure and resilience of foreign financial firms and affiliates, and
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