HSBC plays the China card

HSBC is in danger of being regarded as the bank that cried wolf. It threatened to leave Britain to escape onerous regulation after the financial crisis and then changed its mind.

It made the same threat when the Tories imposed punishment taxes on the banks and retreated when harsh treatment was confined to UK assets. More recently HSBC warned of thousands of jobs migrating to Paris because of Brexit, and now reveals that less 1,000 will go. Whew.

What is also faintly preposterous is that a bank that earns 70pc of its income in Asia and has Hong Kong and Shanghai in its name now talks about a pivot to China.

It is extending its reach into the People’s Republic with plans to increase its investment in the Pearl River Delta region and to roll out more wealth management.

After the many years spent seeking to become more of a global bank, with the disastrous forays into sub-prime mortgage lending in the US and drug fuelled retail banking in Mexico, it wants to focus on its core.

New chief executive John Flint will inherit a much healthier bank from Stuart Gulliver than the current boss received from his predecessors. Profits in the third quarter were a healthy $4.7bn (£3.6bn) in spite of rising costs.

As the best capitalised bank in a fast growing region, HSBC is literally bursting with deposits which have climbed 5pc in the last year.

More exposure to China might be considered a bit of a risk at a time when the IMF is expressing concern about banking-sector assets in China, which have shot up to 310pc of output from 240pc at the end of 2012.

HSBC will, however, be a substantial beneficiary of rising global interest rates. A quarter of a point rise in the US is worth nearly a quarter of a billion pounds in extra income and a bank rate rise in Britain this week around £80m. Maybe it could use some of the cash to repair relations with the 1,200 smallish UK firms hurt by its clumsy clampdown on alleged money laundering.

Of all the British-based banks HSBC is the only one to enjoy a premium rating. As long as it remains wary of over-exposure to the cultish rule of President Xi Jinping in Beijing that status should be untroubled.

Paint job

DULUX owner Akzo Nobel looks to have discovered the joys of Anglo-Saxon capitalism. After defending itself against unwanted attention from Pittsburgh-based PPG and activist investor Elliott, Akzo’s chief executive Thierry Vanlancker wants a defensive deal. His target, US coatings concern Axalta, is around one-third of the size of Akzo Nobel so to describe it as a ‘merger of equals’ is stretching the point.

Akzo is seeking to do some kind of share swap rather than cash bid. Vanlancker is no stranger to his target. He is a former Du Pont executive and Axalta is a spin-off from the American chemical giant. The success of Akzo Nobel’s move will partly come down to Sage of Omaha Warren Buffett who owns 10pc of the target.

Akzo failed spectacularly to meet its pledges at the time of the PPG offer. It has had two profits malfunctions and the promised spin-off of its speciality chemicals division is taking an age.

Without Axalta the Dutch firm might find itself facing a torrent of criticism from Elliott, as the standstill falls away, and possibly a low ball bid from PPG.

Will Dulux be safe under the new arrangement? Hard to say, especially if big slices of costs have to be taken out.

But in a recent conversation Vanlancker sounded committed to the UK and in particular the new Ashington plant in the North-East.

Let’s hope he can hold the line.

Long goodbye

LATEST victim of the failed Deutsche Boerse and London Stock Exchange ‘merger of equals’ looks to be DB’s chairman Joachim Faber.

The former Allianz boss initiated the abortive deal when he met Donald Brydon, chairman of the LSE, at a London hotel. That leaves Brydon as the only person standing as a result of the fiasco.

Brydon’s insurance policy is the long goodbye of Xavier Rolet who may hang around until the end of next year.

It would be careless to get rid of a chairman and chief executive at the same time.

But there are precedents.