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Daily Telegraph: HSBC set to target Russian consumers

EXTRACT: Experiences such as Shell’s, which had to relinquish control of its Sakhalin 2 gas project to the state-owned Gazprom, have raised concerns about political interference.

THE ARTICLE

HSBC has applied for a Russian retail banking licence in a move that would make it the first UK bank to build a consumer presence in the former Soviet Union.

A retail banking presence would add to HSBC’s corporate and investment banking interest in the fast-growing Russian economy.

It is understood that HSBC wants to target personal and small business banking. Should it be awarded a licence, it may choose to operate just as a phone or internet bank without high street branches. The application was filed in October last year but no decision has yet been made.

Banking in Eastern Europe is growing rapidly but business is still treading warily in Russia, despite its being a “market and economy with an enormous amount of potential”.

Experiences such as Shell’s, which had to relinquish control of its Sakhalin 2 gas project to the state-owned Gazprom, have raised concerns about political interference.

Royal Bank of Scotland is linking up with Russia’s leading investment bank, Renaissance Capital, to provide currency, interest rate and credit derivatives to the Russian government and corporate clients. However, it has not applied for a licence.

Lehman Brothers, the US investment bank, is only returning to the region this year after a decade-long hiatus. No UK bank has a personal or small business banking presence in Russia.

HSBC is shifting its global expansion focus to Eastern Europe after failing to take advantage of the opportunities in the 1990s, when it was busy in Central and South America.

HSBC may be distracted from its expansion plans by problems at its HSBC Finance Corporation unit in the US. Bad debts in its US sub-prime mortgage book caused the bank to issue its first-ever profits warning last week

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/12/cnhsbc12.xml

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