SYDNEY—HSBC Holdings PLC, Europe's biggest bank by stock-market value,
will beef up its corporate-finance business in Australia, part of a
strategy to increase its presence in an economy booming on the back of
Asia's demand for commodities, the lender's local chief executive
said.

"There's a lot of interest in good corporate fundamentals coming out
of Australia," Paulo Maia, HSBC's Australia head, said in an interview
with The Wall Street Journal.

A greater emphasis in Australia comes as HSBC and other international
lenders search for low-risk opportunities outside more traditional
markets in the U.S. and Europe, which are recovering more slowly than
Asia from the global financial crisis. Asia accounts for more than
half the bank's total earnings.

The bank plans to hire for its Australian debt capital markets team as
well as expand its onshore leveraged acquisition and loan syndication
operations, said Mr. Maia, who was previously deputy chief executive
of the European bank's Brazilian business.

HSBC particularly wants to tap into the growing market for leading
local corporations and banks to borrow money offshore. Already this
year, the volume of nonbank corporations issuing foreign-currency debt
has grown by 35% to 13.97 billion Australian dollars (US$13.71
billion) split across 26 deals, according to Dealogic.

HSBC's first-half pretax profits from Australia grew 28% compared with
a year earlier to A$152 million. Still, that's a slower rate of growth
than seen at local rivals, including Commonwealth Bank of Australia,
which in the same period recorded a 37% jump in pretax profits.

Compared with its Australia rivals, HSBC has a relatively small retail-
branch network in the country. But Mr. Maia rulef out buying a smaller
local bank to build its presence in big urban centers like Sydney,
Melbourne and Brisbane.

"We haven't been able to identify any bolt-on acquisitions that would
make sense for us," he said. "We want to play on the mass affluent; we
don't want to go too much downmarket."

HSBC's enthusiasm for Australia comes as the bank remains locked in a
war of words with the British government over the rising cost of
basing itself in Europe. The bank's outgoing CEO, Michael Geoghegan,
and his successor, Stuart Gulliver, have warned separately that new
rules proposed to curb pay in the financial-services industry are
putting it at a disadvantage to its U.S. rivals in international
markets.


From The Wall Street Journal - WSJ.com


By Market Talk via News -