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HSBC CEO sees market impact from Evergrande debt woes By Reuters

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© Reuters. China Evergrande Group’s workers enter the Beijing construction site September 22, 2021. REUTERS/Carlos Garcia Rawlins

SINGAPORE (Reuters) – HSBC Holdings (NYSE:) PLC expects the debt problems involving embattled property developer China Evergrande Group to have an impact on capital markets but does not see any direct impact on the bank, its group CEO said.

Noel Quinn, a Bank of America (NYSE) CEO said that the market turmoil could have a second-order- and third-order effect. This was according to a webcast posted by HSBC.

Evergrande’s current situation is “concerning” and has the potential to have a second- and third-order effect, especially on the capital and bond markets. He said that we have to keep our distance from this.

Evergrande had to meet a Thursday payment deadline on its dollar bond. This was a critical moment for investors around the world concerned that Evergrande’s woes could extend beyond its property sector.

Quinn indicated that HSBC was very focussed on China and Hong Kong’s commercial real property business.

We focus on Tier 1 cities and Tier 1 properties. Tier 1 lenders are also our main priority. There is a manageable exposure. That exposure is not a concern to us,” Quinn said.

Quinn said HSBC’s loan loss provisions in Hong Kong and China as outlined in its half-year results https://www.reuters.com/article/us-hsbc-hldg-results-idTRNIKBN2F30A2 indicated that the lender was not concerned about its commercial real estate exposure in China.

Quinn stated that “nothing has occurred in the last weeks that will alter that position in our mind as a bank and an institution.”

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