Bank's humbling road back East

The share price of HSBC has recovered half of the losses incurred since the pandemic crash.

But there still appear to be many loops to run through before the bank knows if it will reach the finishing line in China - that is, if a Reuters report providing an account of how some major Chinese state-owned enterprises have been on a campaign to "humble" the bank is correct.

According to the report, China Baowu Steel Group deliberately singled out HSBC from a long list of 60 money lenders for mention during a workshop in November last year.

A presenter named HSBC in particular in case some participants in the company workshop missed it, reminding them to avoid doing business with the bank and others on the list.

The others on Baowu's blacklist were mainly troubled Chinese banks.

How sarcastic the incident must have been for HSBC - even if it was placed towards the bottom of the unwanted list.

Reuters said it was also able to identify a total of nine state-owned enterprises that have either terminated or cut back on business with HSBC.

That is surely bad news for the bank when it is bent on shifting its international focus to Hong Kong and the mainland at a time of growing conflicts between China and the West.

Clearly, HSBC has decided which side to sit near in the conflicts.

However, this does not mean that those the bank's management is trying to win over have to be impressed.

To some extent, the Reuters report offered a missing piece that explained why HSBC lagged behind its peers despite the fact that Hong Kong and the mainland accounted for 39 percent of its global revenue in 2020.

Among managers of investment-grade greenback bond deals in China, the bank was reported to have fallen from second place in 2020 to 12th so far this year.

In syndicated loans, HSBC's share in China also dropped from sixth in 2019 to ninth in 2020. For instance, the value of its share of syndicated loans to Chinese companies - including state-controlled firms - was reported to have plummeted 55 percent in 2020 when the market overall dropped 4 percent.

Senior HSBC executives, including chairman Mark Tucker, have been upbeat on their relationship with mainland regulators and customers. Thumbs up to their upbeat talks - although this is only one side of the coin.

Despite criticism from politicians in Washington and London, HSBC has been making relentless efforts to mend fences with Beijing following the fallout over the Huawei saga in which Beijing held HSBC responsible for the arrest in Canada of ex-Huawei executive Meng Wanzhou.

Initially, the bank attempted to tread a fine balance between the two worlds.

The "humble campaign" as revealed by Reuters confirmed that the time to enjoy the best of both worlds is long gone.

As HSBC relocates four of its most senior executives to Hong Kong this year to focus on the markets most important to them, chief executive Noel Quinn will discover that the return to the East is going to be trickier than imagined.

Yesterday, HSBC's share price closed 1.4 percent down.