HSBC opens fin-tech firm in Shanghai as controversies swirl

HSBC Insurance, owned by the HSBC Group, announced on Wednesday that it has set up a fintech venture in Shanghai amid the company's controversies involving social unrest in Hong Kong last year and the arrest of Meng Wanzhou in Canada at the request of the US government.

The new company is expected to bring business growth in HSBC's China operations, which already contributes most of the bank's profits.

The fin-tech company is expected to open at the end of this year, and will provide solutions for financial institutions, both inside the group as well as outside. Its products will include big-databased management platforms.

The latest expansion of HSBC's operations in China shows that HSBC continues to invest in the Chinese market, Bryce Johns, global executive of HSBC Life said.

The establishment of the new company is a sign of the continuous opening up of China's financial market, Deng Yu, senior research fellow of the Atlantis Financial Research Institute, told the Global Times on Wednesday.

"It sends a positive signal that the Chinese market is open to any kind of capital as long as it follows the approval process, which means that China separates political issues from finance," Deng said.

In July, China scrapped foreign ownership limits in most of the financial sector, which is valued at around $45 trillion. Under the new rule, foreign investors, including the London-based HSBC, can fully own financial businesses.

HSBC is, after all, a major global bank that does a lot of business in China, said Deng. For example, HSBC is the second-largest shareholder in one of the biggest banks in China, Bank of Communications, with a stake of about 19 percent.

The expansion in China will mean a big increase in profits for HSBC, which underperformed in the first half of this year, Deng said.

HSBC's first-half statements, released in August, showed that net profits fell 69 percent yearon-year to $3.1 billion.

"Investing in a new company in Shanghai is the best choice for HSBC. It needed Chinese mainland investments to make up for losses in its Hong Kong business," said Deng.