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HSBC chief insists China ‘open to international business’ and worst of its property crisis is over

By: Lars Mucklejohn

Banking and Fintech Reporter

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The bank told its investors that it plans to discuss restructuring how Noel Quinn, the firm’s CEO, is remunerated even though his pay nearly doubled last year to £10.6m thanks largely to long-term performance bonuses kicking in.
The bank told its investors that it plans to discuss restructuring how Noel Quinn, the firm’s CEO, is remunerated even though his pay nearly doubled last year to £10.6m thanks largely to long-term performance bonuses kicking in.

HSBC chief executive Noel Quinn has reiterated his argument that the worst of China’s property crisis is over, saying the country is “open to the international business community”.

Quinn said last month that the “major correction is over” in the country’s real estate sector but stressed investors “should not equate the bottom of the market with no further issues”.

Doubling down at the Financial Times’ Global Banking Summit on Wednesday, he disagreed that it was hard to do business in China.

“We’re finding it very open,” he said. “China is open to the international business community, the international banking community.”

The Asia-focused lender posted a $3.2bn surge in profit in the third quarter and announced a further $3bn in share buybacks, bringing the total this year to $7bn.

But earnings were hit by impairment charges of $500m related to China’s crisis-stricken commercial real estate sector.

Quinn noted that the bank’s exposure to the crisis was “very manageable… within the context of a trillion dollar balance sheet”.

“I still think there are strong fundamentals there in the consumption market in China, so I’m more optimistic on global economics than the general sentiment,” he added.

“The volume of activity in the sales of commercial real estate units and apartments… went through the floor. It’s almost a case of we couldn’t go much lower.”

He said the market had bottomed out but flagged “collateral consequences” that will continue to trickle through the Chinese economy.

Standard Chartered has also struggled with China’s economic slowdown, setting aside more than expected to deal with problems in the region.

HSBC’s latest share buyback came after it fought off a campaign led by its biggest investor Ping An to split the bank’s Asia business into a separate company.

Quinn said on Wednesday that Ping An was the only one of HSBC’s top 50 shareholders to vote in favour of a breakup.

“Hoping there’s an arbitrage between the UK stock exchange and the Hong Kong stock exchange is not a sustainable strategy,” he added.