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HSBC seeks Shanghai stake

November 28, 2001 Posted: 1417 GMT

LONDON (CNN) -- HSBC Holdings, Europe's biggest bank by market value, said on Wednesday it is in talks to buy a stake in China's Bank of Shanghai.

The move would make it the first overseas commercial bank to own a stake in a Chinese lender and take it back to its Shanghai roots. London-based HSBC declined to say how big a stake it would buy and for how much. 

Foreign banks are keen to invest in China to tap the booming savings market. Hong Kong banks, facing weak loan growth as the economy sputters, are looking into China for long-term growth.

HSBC, which owns the Hong Kong-based Hongkong and Shanghai Banking Corporation, has ambitions in China after the country's World Trade Organisation entry opens its banking market.

Its Chinese branches cannot do business in the yuan currency and are limited to serving foreign-invested enterprises.

The Bank of Shanghai was established in mainland China in 1995 and provides personal and corporate banking services. It had $11.6 billion worth of assets at the end of last year, with 196 branches in Shanghai and 4,500 staff.

But some UK banking analysts were not overly excited about HSBC's China move.

"The China story for all banks, and particularly for HSBC and Standard Chartered, is an interesting long-term story and not one for this generation of investors," said Chris Ellerton, global banks coordinator at UBS Warburg.

Reuters contributed to this report




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