By Iain Withers, Selena Li and Sinead Cruise
LONDON/HONG KONG (Reuters) - HSBC (LON:HSBA) is building up its green finance and bond teams in China to meet surging demand, two sources with knowledge of the matter told Reuters, as Europe's biggest bank presses on with expansion in the country despite geopolitical tensions.
HSBC chairman Mark Tucker met with Chinese regulatory officials in Beijing last week to help pave the way for the bank to accelerate growth in China, including in the country's fast-growing $3.9 trillion fund market.
Tucker told officials an "ice-breaking" spirit adopted by British businesses historically would help the UK and China overcome challenges and geopolitical tensions, a bank statement published on Wednesday said.
HSBC has committed to bolstering its money-spinning Asia business and shedding under-performing units elsewhere, after coming under pressure from its biggest Chinese investor Ping An Insurance to prioritise the region.
HSBC will make key investments in its asset management arm in China this year, including launching new teams dedicated to green assets and fixed income, the first of the two sources and a third source with knowledge of the matter said. The sources did not put a figure on the investments.
The lender is exploring offering carbon offsetting products to customers after a surge in client queries over the past year, the second source said, particularly from Western multinational companies under pressure to meet strict emissions targets.
HSBC declined to comment.
Climate transition has also become a pressing issue for domestic Chinese firms. The world's biggest greenhouse gas emitter saw its climate fund assets soar from a small base after President Xi Jinping said China would reach "carbon neutrality" by 2060.
Such funds have garnered $34 billion in assets as of September last year, according to Morningstar data.
HSBC has stepped up expansion in China despite criticism from some lawmakers in the West of the bank's conduct in the region.
HSBC's Tucker discussed the bank's planned growth in asset and wealth management in the meetings with Beijing officials, according to a release from the municipal government, which added that foreign participation in green finance was welcome.
HSBC CEO Noel Quinn visited Beijing in March for the first time since the COVID-19 outbreak, when a top official told him China "welcomed an expansion of HSBC's investment in the country".
The demise of Credit Suisse (SIX:CSGN) as an independent bank after its emergency takeover by rival UBS earlier this year presents opportunities for rivals to grow market share in asset and wealth management in Asia, the first source said.
UBS halted its own plans to set up a new fund unit in China and decided to maintain ownership in a mega fund joint venture from its Credit Suisse takeover, Reuters reported this week.
HSBC said last week it was "open to opportunities" to expand its businesses in China, after its local partner put a 31% stake in its HSBC Jintrust Fund Management joint venture on the block.
HSBC's new fixed income team in China will initially comprise of five staff, in response to growing client demand for bonds, the first source said.
HSBC's green finance push builds on its acquisition of Hong Kong-based specialist asset manager Green Transition Partners in January, when the bank said it planned to grow its green infrastructure services across the Asia-Pacific region.