HONG KONG – HSBC said on Tuesday that its 19.03% stake will drop from 19.03% to about 16% as Bank of China raises funds through private stocks.
Four of China’s largest state-owned banks, including Bocom, said they plan to raise 520 billion yuan from investors including the Ministry of Finance amid a promise to help them support the economy.
The fundraising announcement comes after Chinese policymakers promised to reorganize major national banks to improve their ability to enhance their actual economic capabilities. Bocom said at the time that it would sell its shares to raise up to 120 billion yuan.
HSBC said the bank’s shares would be reduced by 3 percentage points to 16%, resulting in a pre-tax loss of between $1.2 billion and $1.6 billion.
HSBC said in its quarterly profit report that it will recognize potential losses in the profit and loss statement of Asian lenders in case of completion, foreign exchange changes and other factors.
HSBC said that since its equity in BOCOM is for long-term investment purposes, the losses are “not deductible for tax purposes” and will not have a significant impact on the capital ratio or dividend distribution capacity.
Last February, HSBC reported its stake in Bocom (the largest stake in overseas lenders to date), which is $3 billion in fees because of poor lending in the world’s second-largest economy amid the protracted real estate sector crisis.
HSBC made the majority of revenue and profits in Asia on Tuesday, reporting a 25% drop in the first quarter and warned of increased business uncertainty in the face of global tariffs by U.S. President Donald Trump.
This article was generated from the Automation News Agency feed without the text being modified.
