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    Home > Finance > HSBC sees up to $1.6 billion in loss on China bank stake reduction
    Finance

    HSBC sees up to $1.6 billion in loss on China bank stake reduction

    Published by Global Banking & Finance Review®

    Posted on April 29, 2025

    2 min read

    Last updated: January 24, 2026

    HSBC sees up to $1.6 billion in loss on China bank stake reduction - Finance news and analysis from Global Banking & Finance Review
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    Quick Summary

    HSBC will see a $1.6 billion loss as its stake in BOCOM reduces from 19.03% to 16% following a share placement.

    HSBC Projects $1.6 Billion Loss on China Bank Stake Cut

    HONG KONG (Reuters) -HSBC said on Tuesday that its stake in Bank of Communications (BOCOM) will drop to about 16% from 19.03%, and it will book a loss of up to $1.6 billion as a result of the Chinese bank's fundraising by private placement of shares.

    Four of China's largest state-owned banks, including BOCOM, said in March they plan to raise a combined 520 billion yuan($71.5 billion) from investors, including the finance ministry, after Beijing pledged to help them support the economy.

    The fundraising announcement came after Chinese policymakers pledged to recapitalise major state banks to boost their ability to bolster the real economy. BOCOM at that time said it would sell shares to raise as much as 120 billion yuan.

    After the completion of the BOCOM capital raising, HSBC said it expects the bank's stake to reduce by around three percentage points to 16%, resulting in a pre-tax loss in the range of $1.2 billion to $1.6 billion.

    The potential loss will be recognised in the Asia-focused lender's income statement, subject to the timing of completion, foreign exchange changes and other factors, HSBC said in its quarterly profit report.

    HSBC said that the loss "would not be deductible for tax purposes" as its shareholding in BOCOM is being held for long-term investment purposes, and it will not have a material impact on capital ratios or dividend distribution capacity.

    In February last year, HSBC reported a shock $3 billion charge on its stake in BOCOM, the largest yet by an overseas lender, as bad loans mounted in the world's second-largest economy amid a protracted property sector crisis.

    On Tuesday, HSBC, which makes the bulk of its revenues and profits in Asia, reported a 25% fall in first-quarter profit and warned of heightened business uncertainty in the face of U.S. President Donald Trump's sweeping global tariffs.

    ($1 = 7.2737 Chinese yuan renminbi)

    (Reporting by Sumeet Chatterjee and Selena Li; Editing by Kate Mayberry)

    Key Takeaways

    • •HSBC's stake in BOCOM will reduce from 19.03% to 16%.
    • •The reduction results in a potential $1.6 billion loss.
    • •China's state-owned banks plan to raise 520 billion yuan.
    • •HSBC's loss is not tax-deductible and affects capital ratios.
    • •HSBC reported a previous $3 billion charge on BOCOM stake.

    Frequently Asked Questions about HSBC sees up to $1.6 billion in loss on China bank stake reduction

    1What is the main topic?

    The article discusses HSBC's anticipated $1.6 billion loss due to a reduction in its stake in China's Bank of Communications.

    2Why is HSBC reducing its stake?

    HSBC's stake reduction is a result of BOCOM's fundraising through private placement of shares.

    3How does this affect HSBC?

    The stake reduction leads to a non-tax-deductible loss, impacting HSBC's capital ratios but not its dividend capacity.

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