HSBC, Europe's biggest bank, rolled out a new sub-branch yesterday in the city in a move to quicken its expansion in China.

The bank's fifth outlet in Shanghai, the Kirin Plaza sub-branch, is designed to meet the needs of both retail and commercial banking customers.

The lender has expanded its network presence in China to 23 outlets, including 12 branches and 11 sub-branches.

Meanwhile, the Hong Kong-based Hang Seng Bank  62 per cent owned by HSBC, opens a fourth sub-branch in Shanghai today.

"We are delighted to be able to extend our services to one of Shanghai's most dynamic districts," Richard Yorke, chief executive officer of HSBC China, said yesterday.

"The four Chinese cities that we are focused on (Beijing, Shanghai, Shenzhen and Guangzhou) correspond in terms of the number of inhabitants to a reasonably large European country," he said.

"It therefore makes sense to capture this attractive retail market by opening up sub-branches," he said. "It's important for a bank to be close to its customers, especially in a country as large as China."

China is regarded at the heart of HSBC's strategy, and its importance is reflected in the scale of the bank's investment.

As of 2005, the lender's total equity investment had exceeded US$4 billion  the largest of any foreign investor.

It includes an 8 per cent stake in Bank of Shanghai, a 19.9 per cent stake in Ping An Insurance and a 19.9 per cent in Bank of Communications, the country's fifth largest lender.

It has filed applications for representative offices in Hangzhou and Ningbo in East China's Zhejiang Province, and Dongguan in South China's Guangdong Province.

The lender has obtained the approval to set up a branch in Hangzhou, which is expected to open later this year.

Foreign lenders have begun to look beyond providing only retail and commercial banking services.

At yesterday's press conference prior to the opening ceremony in Kirin Plaza, HSBC's President and Chief Executive Officer Michael Smith said: "It's sensible for HSBC to co-operate with new ventures."

He said the bank would not rule out the possibility of linking up with the Bank of Communications in fund management, as long as government policy allows the deal.

Fund management has become a focus for foreign banks since the launch of the qualified domestic institutional investors (QDII) scheme last month.

Under the scheme, qualified financial institutions, such as commercial banks, insurers and fund companies, are allowed to invest overseas.

Many Hong Kong banks believe they have the capability to help maximize returns.
Also, the Interim Provisions on the Administration of Overseas Investment by the National Social Security Fund took effect earlier this month, indicating China has finally cleared all the hurdles necessary to allow the fund to invest overseas.

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