9:56, Monday 19 September 2011

* Higher mortgage rates reflect higher cost of capital -
HSBC (LSE: HSBA.L – news)

* HSBC HK may see net increase in employees in 3 years

* HSBC announced 2 weeks ago to cut 3,000 jobs in HK

(Adds details of mortgage rise)

HONG KONG, Sept 19 (Reuters) – Tightening liquidity in Hong
Kong may continue to push up mortgage rates in the Chinese
territory, the head of HSBC Holdings Plc (NYSE: HCS-PB – news) in Asia said
on Monday, potentially damping already weak real estate
sentiment even further.

HSBC revised its mortgage rate upwards over the weekend to
2.3-2.7 percent over the Hong Kong interbank offer rate (HIBOR),
up from 1.8-2.3 percent previously, which HSBC Asia Chief
Executive Peter Wong said was a reflection of the rising cost of
capital.

Hong Kong’s property market has already begun to show signs
of slowing following a series of measures announced by the
city’s government to cool prices, including increasing the
downpayment required for certain types of property.

Developers, including Sun Hung Kai Properties Ltd
the world’s biggest developer by market value, have all said
that sales may soon slow.

Wong also said the bank was likely to see a net increase in
the number of people it employs in Hong Kong within three years,
with 1,000 already added in the first half of this year.

Earlier, the bank had said it would cut up to 3,000 jobs in
Hong Kong over the next three years.

“Costs in Hong Kong have risen faster than revenue in the
past few years,” Wong told reporters. “That’s why there was a
need to relook some of the jobs that were added over the years.”

HSBC’s Hong Kong-listed shares were down 2.6 percent on
Monday, in line with the 2.8 percent decline of the benchmark
Hang Seng Index .

(Editing by Chris Lewis)