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Ant Group
BusinessBanking & Finance

HSBC, Bank of China (HK) pocket up to US$3.2 million in fees from Ant’s IPO loans, even as brokers waive charges on halted stock sale

  • The lenders extended half of the HK$500 billion in margin financing offered by all banks and stockbrokers in the city
  • Smaller banks and some stockbrokers have waived interest charges

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HSBC extended HK$150 billion in margin loans, which gives it an income of between HK$10 million and HK$18 million. Photo: Bloomberg
Enoch Yiu,Chad BrayandDaniel Ren

HSBC and Bank of China (Hong Kong), two of the biggest margin lenders for Ant Group’s suspended initial public offering (IPO) in Hong Kong, will pocket up to HK$25 million (US$3.2 million) in interest income, after opting not to waive interest charged from customers.

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Ant has been refunding investors in Hong Kong since Wednesday, after its mega dual listings in the city and on Shanghai’s Star Market were halted by Chinese regulators. By Friday, it will return a record HK$1.3 trillion to 1.55 million retail investors. But those who had taken out margin loans to buy the shares face HK$60 million in interest payments, according to an estimate by brokers.

The lenders, two of Hong Kong’s three note-issuing banks, will take the biggest cut, having extended half of the HK$500 billion in margin financing offered by all banks and stockbrokers in the city. Smaller banks and some stockbrokers have, however, waived the interest charged to customers.

The decision to not join in comes as HSBC and BOCHK are facing increasing pressure on their margins from an extended period of historically low interest rates, which is not likely to change before 2023, as central banks look to jump-start economies hit hard by the coronavirus pandemic.

“Customers are being refunded in accordance with our IPO loan terms and conditions,” an HSBC spokesperson said. The bank extended HK$150 billion in margin loans at an interest rate of between 0.48 per cent and 0.88 per cent for five days, which gives it an income of between HK$10 million and HK$18 million. BOCHK lent about HK$100 billion at 0.5 per cent.

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“I am very disappointed, as I have borrowed HK$16 million from HSBC to subscribe to Ant’s IPO. Now, I can’t get any shares, but still need to pay interest,” said Kenia Cheng, a Hong Kong businesswoman.

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