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 readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on April 29, 2025
2 min readLast updated: January 24, 2026
HSBC will see a $1.6 billion loss as its stake in BOCOM reduces from 19.03% to 16% following a share placement.
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)
The article discusses HSBC's anticipated $1.6 billion loss due to a reduction in its stake in China's Bank of Communications.
HSBC's stake reduction is a result of BOCOM's fundraising through private placement of shares.
The stake reduction leads to a non-tax-deductible loss, impacting HSBC's capital ratios but not its dividend capacity.
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