HSBC explores bolstering Singapore to balance China reliance

HSBC Holdings is considering ways to reduce its dependence on China, particularly Hong Kong, and enhance the autonomy of its Singapore operations, according to sources familiar with the bank's plans. The London-based financial institution, which generated approximately 40% of its pretax profit in the first half from Hong Kong, is exploring "Project Sirena" to give its Singapore branch greater independence.

The project is being carried out internally, and HSBC is evaluating various options to achieve this objective. The initiative aims to diversify risk across its Asian business, reflecting a broader trend among major financial groups that are looking to insulate their Asian assets from growing geopolitical risks. Singapore, known for its political stability and status as a premier wealth and banking hub, has become an attractive alternative to Greater China for firms seeking operational flexibility.

However, HSBC's CEO, Georges Elhedery, has expressed confidence in Hong Kong's prospects, claiming the city would surpass Switzerland to become the world's largest cross-border wealth hub by the end of the decade. HSBC plans to combine its major banking services in Singapore under a single entity within the next few years, with a potential next step involving the integration of other regional operations under the Singapore subsidiary.

The bank's goal is to establish a second regional base alongside Hong Kong. Despite these plans, HSBC's co-CEO, Surendra Rosha, confirmed that the bank remains under the ownership and management of its Hong Kong subsidiary, headquartered in Hong Kong, and that there are no current plans to alter this structure. The bank's decision to explore these options comes amid concerns about appearing to hedge its bets and the potential risks of provoking regulators, considering its substantial exposure in Greater China. The deliberations remain fluid, with no definite decisions on the path forward.