HSBC left off list of rate-set­ting banks in rate re­form

Global Times US Edition - - BIZUPDATE -

HSBC, which has the largest as­sets among for­eign banks in the Chi­nese main­land, was not se­lected by the Peo­ple’s Bank of China (PBC), China’s cen­tral bank, as one of the 18 rate-set­ting banks in­clud­ing two over­seas banks in its re­cent in­ter­est rate mech­a­nism re­form.

The PBC chose Stan­dard Char­tered and Cit­i­group.

This led to mar­ket spec­u­la­tion as to whether HSBC failed the se­lec­tion partly be­cause of the con­tro­versy sur­round­ing its al­leged in­volve­ment in the US’ in­ves­ti­ga­tion into Chi­nese telecom­mu­ni­ca­tions gi­ant Huawei.

HSBC didn’t re­spond to an in­ter­view re­quest from the Global Times as of press time.

At a press con­fer­ence on Tues­day, a re­porter raised the ques­tion of why HSBC was not in­cluded in the list of quot­ing banks for the loan prime rate (LPR).

Sun Guofeng, head of the mone­tary policy de­part­ment of the PBC, said at the news con­fer­ence that the newly added banks “have a rel­a­tively big in­flu­ence in the credit mar­ket among sim­i­lar banks, rel­a­tively strong loan pric­ing ca­pa­bil­i­ties and rel­a­tively good ef­fects in serv­ing small and mi­cro-sized en­ter­prises.”

“All the eight new quot­ing banks have those char­ac­ter­is­tics and they were se­lected by the mar­ket rates pric­ing self-dis­ci­pline mech­a­nism,” Sun said.

The eight new banks, in­clud­ing two over­seas banks and some do­mes­tic com­mer­cial banks, joined the club of rate-set­ting banks, com­posed of 10 ma­jor banks in the past, that re­port their one-year and five-year LPR to the PBC on a monthly ba­sis.

The PBC will an­nounce a LPR based on the aver­age of those rates for the bank­ing in­dus­try to use as a bench­mark.

Xi Jun­yang, a pro­fes­sor at the Shang­hai Univer­sity of Fi­nance and Eco­nomics, told the Global Times that it’s hard to say why HSBC was not cho­sen as one of the new quot­ing banks “but the stum­bling rep­u­ta­tion of HSBC in China is likely to be one of the rea­sons.”

Sun said that the quot­ing banks will be “ad­justed” in the fu­ture ac­cord­ing to reg­u­lar ap­praisals of their quo­ta­tions.

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