HSBC chief denies reports of bid for Chinese bank

HSBC's chief executive today distanced the bank from reports that it is considering a bid for a Chinese bank to reinforce its presence in the country.

Michael Geoghegan said he was happy with HSBC's stake in Bank of Communications as its primary investment vehicle in China.

Days after arriving at his new base in Hong Kong, to where he has moved from London to spearhead the bank's Asian expansion, Mr Geoghegan was facing headlines that he wanted to buy a majority stake in one of China's big three lenders - ICBC, Bank of China or China Construction Bank.

Chinese investment regulations limit the holdings of foreign banks in domestic lenders to 20 per cent, and HSBC owns just under 20 per cent of Bank of Communications, the country's fifth-largest lender.

Mr Geoghegan declined to comment on HSBC's interest in one of China's big three: "We are happy with our investment in Bank of Communications. That's what I am saying. It's our principle investment in China."

He said that HSBC would have to wait until China relaxed the 20 per cent stake limit if it wanted to buy control of one of the big three banks, and that there were no discussions with regulators on allowing this.

"We are not talking to Beijing about an increase at the current time over the 20 per cent, as you know it's a regulatory top limit you can have and it's up to the Chinese authority to change that as they wish," he said.

"If they change it I suspect they will change it for the whole banking industry, but we are not asking them to change that for the current time."