HSBC explores bolstering Singapore to balance China reliance

HSBC has been exploring ways to ease its reliance on China, including Hong Kong and give more independence to its Singapore operations, as the bank seeks to diversify risk across its Asia business, according to people familiar with the matter.

The London-based lender, which generated about 40 per cent of its pretax profit in the first half from Hong Kong, has internally discussed several options to give its Singapore arm greater autonomy, the people said, asking not to be identified discussing a private matter. The initiative is carried out under the name “Project Sirena”.

HSBC’s review highlights how some of the world’s largest financial groups are moving to insulate their Asian assets from mounting geopolitical risks.

Singapore, bolstered by relative political stability and its standing as a premier wealth and banking hub, has emerged as a top beneficiary as firms look beyond Greater China for operational flexibility. 

It comes even as chief executive officer Georges Elhedery has repeatedly voiced confidence on Hong Kong’s prospects, predicting the city would overtake Switzerland to become the world’s largest cross border wealth hub before the end of the decade.

In a first step, the bank plans to combine its major banking services in Singapore under one entity over the next few years. A possible next move would be to bring in the other regional operations under the Singapore subsidiary, with the ultimate goal of establishing a second regional base alongside Hong Kong, according to the people.

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In a statement, Surendra Rosha, co-CEO of Asia and the Middle East, confirmed the bank will combine its separate units in Singapore as part of a simplification drive, though said it had no further plans after that.

“All of our Asia-Pacific banking entities remain under the ownership and management of the Hongkong and Shanghai Banking Corporation Limited subsidiary head officed in Hong Kong, and there is no plan to make any changes to this,” Rosha said in an e-mailed statement.

The deliberations remain fluid with no firm decisions on the path forward, the people said. Like other multinationals, HSBC is also wary of appearing to hedge its bets given its significant exposure in Greater China and concerns about provoking regulators, the people said.

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Making its Singapore operations more independent would be a major step for the 161-year-old lender, which was founded in Hong Kong and moved its headquarters to London in 1993.

At the same time, the bank is becoming more reliant on the Chinese territory after last year announcing a US$14 billion takeover of partly-owned Hang Seng Bank, while it also has exited businesses in Europe and the Americas.

Any signs of hedging Hong Kong, where HSBC serves as one of three currency-issuing lenders, would face stiff local pushback. It would also risk alienating Beijing, where the bank maintains expansive mainland operations.

HSBC’s assessment isn’t without precedent. In 2019, smaller rival Standard Chartered consolidated its operations into a locally incorporated subsidiary, creating dual hubs in Singapore and Hong Kong to simplify its network and trim costs. 

HSBC has recently faced intense scrutiny on other fronts from Hong Kong authorities over its allocation of AI talent to Singapore as both Asian financial hubs battle for dominance. 

Currently, the lender operates a hybrid structure in jurisdictions such as Singapore.

In May 2016, HSBC locally incorporated its retail banking and wealth management business in Singapore under HSBC Bank (Singapore) while also operating a branch under Hong Kong. It runs locally incorporated subsidiaries in countries such as Malaysia and Indonesia, though both remain under its Hong Kong-based business.

A subsidiary is more free standing than a branch, with its own governance, capital needs and deeper local regulatory oversight. Such a structure also faces different treatment in the event of financial difficulties.

Overhaul

The lender has over the past couple of years radically overhauled its business following the appointment of CEO Elhedery in September 2024. Under his leadership the bank has shuttered, sold or merged several business lines, cutting thousands of jobs as it looks to refocus its operations on its core Asian markets. 

Elhedery has made stripping complexity out of HSBC a central plank of his overhaul, saying earlier this year that he had been “ruthless about killing complexity” at the lender.

Hong Kong remains HSBC’s profit engine, generating US$7.8 billion of pretax profits in the first half of 2026, about 40 per cent of the group total.

Singapore, despite its growing importance as an Asian wealth hub, generated just US$774 million — roughly a 10th of Hong Kong’s profit. India contributed US$965 million and mainland China US$1.8 billion, according to HSBC’s accounts. BLOOMBERG