Banking

Just days ago HSBC Holdings PLC said earnings for 2010 doubled from a year earlier, to $13.2 billion, with Asia accounting for almost two-thirds of the profit. But Peter Wong, the bank's chief executive for Asia Pacific, is keen to stress the importance of cost control and measured growth.

Peter Wong says, "If I ever had the chance to write a book, it'd be about how to make complicated life simple."

Career: Joined Citibank in 1980 as an assistant financial controller. Moved to Standard Chartered in 1997 as head of consumer banking for China and Hong Kong. Joined HSBC in April 2005.

Education: educated at Indiana University. Has a bachelor's and MSc in computer science and an MBA in marketing and finance.

Extracurricular: Sports, especially playing golf. "Without sport I think I'd be dead already. Sport gives you a competitive sense."

On the financial crisis: "We [HSBC] were the first ones to come out and talk about subprime. Everybody thought we were smoking something. But later it came true."

China's foreign exchange regulator has refuted media reports that the country may lose up to $450 billion by holding bonds of Fannie Mae and Freddie Mac, the US mortgage giants.

The reports suggested that the US government might phase out the two companies. "The report is groundless," the State Administration of Foreign Exchange (SAFE) said in a statement published on its website on Friday, without referring to any specific media outlets.

The regulator said that it has been receiving regular payments of interest and principal on the bonds it holds in the two companies.

"Calculated in accordance with widely used indexes, from 2008 to 2010 the annual investment return on the debt was about 6 percent on average," the statement said.

China has never invested in the two companies' equities, and so it hasn't been affected by the decline in their stock prices, it added.

The administration reiterated that security is its top priority when making investments using the country's foreign reserves, and it has already taken appropriate measures to offset major potential risks.

China's central bank warned before the Lunar New Year break that it would focus on inflation, which has been forecast to top 5% in January. 

Inflation jitters spread through emerging markets on Tuesday, prompting China's central bank to raise interest rates for the third time in four months amid worries that a drought threatening the country's wheat crop will put further pressure on global food prices.

With fireworks still echoing from China's Lunar New Year holiday, its central bank said it is raising rates by one-quarter percentage point. It was just the latest move by an emerging-market government—several of which are deploying a panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity.

In Brazil, Latin America's largest economy, the government reported Tuesday that inflation is accelerating, leading markets to expect its central bank to increase its overnight rate, already at 11.25%.

The central bank on Tuesday raised interest rates for the third time since mid-October by another 25 basis points, to help mop up liquidity and tame surging inflation.

Effective on Wednesday, the benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent, and the one-year deposit rate will rise to 3 percent from 2.75 percent, the People's Bank of China (PBOC) said in an announcement on its website.

The tightening measure was announced right at the end of the Spring Festival holidays and one day before the markets open.

Lu Zhengwei, chief economist at Industrial Bank, said the move had been predicted as China maintains strong growth momentum, and the consumer price index (CPI), a major gauge of inflation, was expected to hit a record high in January.

The CPI rose 4.6 percent in December after jumping to a 28-month high of 5.1 percent in November.

The figure for January has yet to be disclosed.

The world's second-largest economy saw its growth expand by 9.8 percent in the fourth quarter of last year, compared to 9.6 percent in the third quarter.

"The risk of rising inflation cannot be neglected because major economies are expected to shore up their growth by maintaining an easy monetary stance. As a result, a large amount of capital flows into emerging economies," the PBOC said in a report published on Jan 30.

It added that rising costs for labor and resources also contribute to inflation.

Du Zhengzheng, a macro-economist at Bohai Securities, predicted that inflation will rise by 4 percent year-on-year in the first half of 2011, after surging to 5.2 percent in January.

"The pressure of increasing inflation has forced the PBOC to take action."

ICBC, Making First Foray Into U.S. Retail Banking

Industrial and Commercial Bank of China Ltd. will proceed cautiously in its drive into U.S. retail banking as it expands globally, Jiang Jianqing, chairman of China's largest commercial bank, said in an interview with The Wall Street Journal.

"In the foreseeable future, our focus will be mainly on emerging markets, which have good prospects for growth. For the American market, we are walking in a very careful way," Mr. Jiang said on the sidelines of World Economic Forum meeting here.

ICBC, the world's largest bank by some measures, last week agreed to acquire an 80% stake in Bank of East Asia Ltd.'s U.S. subsidiary for $140 million.

The pact puts it in position to become the first Beijing-controlled financial institution to acquire retail bank branches in the U.S. Bank of East Asia, a publicly traded company based in Hong Kong, has a total of 13 branches in New York and California.

Earlier Thursday, Mr. Jiang joined other Asian and European bankers in a meeting with U.S. Treasury Secretary Timothy Geithner in Davos. Mr. Jiang said he told Mr. Geithner that Chinese companies want to invest in the U.S.

A person familiar with the meeting said Mr. Jiang added that he wanted the process to invest in the U.S. to be simpler, to which Mr. Geithner responded that the U.S. welcomes investment as long as it meets regulatory protocols.

The Bank of East Asia acquisition deal was "small potatoes," Mr. Jiang said, considering that Beijing-based ICBC, which is 70%-owned by the Chinese government, has 11 trillion yuan in deposits in China, or nearly $1.7 trillion.

Regulators could still block the deal.

Though small in size, the Bank of East Asia deal marks another sign of China's growing global ambitions, in addition to the slow opening of its own financial system to international finance.

Liberalization of the yuan, which is blocked by currency controls from free movement abroad, is an "irreversible" process, Mr. Jiang said.

He said he believes the yuan eventually can be a global currency, and possibly even a reserve currency, something he said will benefit ICBC, considering the hoard of yuan deposits it commands.

"It will bring us a lot of opportunities if this becomes a regionally or globally important currency," he said. "We are expecting and exploring to see whether there are opportunities of yuan business in America."

Mr. Jiang made his global ambitions clear, though he said the drive would proceed "carefully and cautiously" over a long period.

He boasted of ICBC's market capitalization, the largest of any bank in the world, though only a relatively small proportion of its shares trade, given the government's large stake.

ICBC has become increasingly comfortable venturing outside its home markets, which still account for the bulk of its profit.

In 2008, the bank purchased a stake in South Africa's Standard Bank Group.

Mr. Jiang highlighted African markets as one of his top priorities. "The economies of China and Africa are supplementary," he said. "We think Africa will become a very important driver of global growth."

Mr. Jiang largely dismissed growing international concerns that China's economy and lending markets are overheating, which could lead to an even-steeper surge in already high inflation.

Chinese authorities, including the People's Bank of China, are taking "concrete steps" to control the growth of liquidity in Chinese financial markets, including substantial increases in reserve requirements for banks, he said.