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* HSBC plans to quadruple staff numbers
* Pearl River Delta world's most populous urban area
* Planned rail, road links to integrate region with HongKong
* Rising costs, protests delaying infrastructure
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By Clare Jim and Lawrence White
DONGGUAN, China/HONG KONG, June 14 (Reuters) - Every dayhundreds of garment traders alight at the newly-built Humenstation to ply their wares in the southern Chinese city ofDongguan, arriving on high speed trains that whoosh through theterminal every ten minutes.
The station, 90 kilometres north of Hong Kong, is on thefirst open section of a super fast rail network in China's PearlRiver Delta that HSBC is betting will turn theprosperous region of 40,000 square kilometres into a seamlessmetropolis that can fuel the bank's growth in the next decade.
A visit to the area though shows up how infrastructureconstruction that HSBC is hoping will drive the region'sdevelopment is moving at a patchy pace, underlining risks thelender faces in its Asia "pivot" strategy.
Roads leading to the huge, gleaming building of Humenstation are permanently congested and not properly built, localresidents say.
"The government's been constructing the road for over twoyears but it's still muddy and full of bumps and holes," afactory owner in the nearby town of Daojiao said.
A local taxi driver named Xu complained there are only 200parking spaces outside the rail station, making accessdifficult.
"The government had expected the high speed railway to bringmore people, but they didn't use their brain to plan carefully,"he said.
Other, more fundamental, pieces of construction for theregion are behind schedule.
Hong Kong's transport minister said in January that anetwork of bridges and tunnels to link Hong Kong, Macau and thecity of Zhuhai across the Pearl River Delta will not be finishedby its 2016 target date amid rising costs.
Protests by Hong Kong citizens worried about competition forjobs have also caused delays to Beijing's plans to betterintegrate the territory into the region.
HSBC investors largely support the bank's plans to beef upits presence in the Pearl River Delta, which include quadruplingits headcount, and increased lending to mid-sized companies inthe infrastructure and real estate sectors
But they caution the move faces potential pitfalls.
"They will have to be very careful to make sure they don'twaste a lot of money or make bad loans," said Hugh Young,managing director of Aberdeen Asset Management Asia, HSBC's 6thlargest shareholder.
HSBC declined to comment for this story. Last weekexecutives said the bank's long experience in China and prudentapproach to lending will mitigate the risks.
"The GDP per capita in the Pearl River Delta is similar toHong Kong in 1991, we know how to capitalise on this opportunitybecause we've done it before," HSBC's Asia Pacific chiefexecutive Peter Wong told investors.
MEGACITY, INTERRUPTED
Rapid urbanisation over the past 15 years has caused thePearl River Delta to overtake Tokyo as the world's most populousurban area. Its population rose from 27 million in 2000 to morethan 42 million in 2010, according to World Bank data.
The region has an annual gross domestic product of $857billion, which would rank it 17th in the world if it were acountry, just below Indonesia, according to the IMF.
Around half of HSBC's China revenue already comes from thearea, and it has more branches there than any non-Chinese rival.
But after booming in the 1990s and 2000s as one of China'smain export and manufacturing hubs, companies in the Pearl RiverDelta have struggled in recent years due to falling exportdemand and tighter credit conditions.
Industrial and Commercial Bank of China said inits 2014 annual report that the Pearl River Delta saw thehighest level of bad loans of any region in China, with 1.64percent of loans soured against 1.18 percent the previous year.
That makes some analysts question why HSBC is choosing toexpand now.
"HSBC has materially increased exposure to mainland China inrecent years and this is a building risk factor, given ourconcerns on its credit bubble and likelihood of creditdeterioration in the coming years," CLSA analysts wrote in aJune 5 report.
China is hoping road and rail links to integrate the PearlRiver Delta's cities, and suck Hong Kong into its folds, willput it back on a faster growth path.
HSBC is not alone thinking this is a policy it can reappotential riches from.
Singapore's Oversea-Chinese Banking Corporation has expanded in the region through investing in Hong Kong's WingHang bank and, like HSBC, is hoping to work with local companieslooking to do more business offshore. The pair have to contend though with restrictions on howforeign banks can operate, which cede competitive advantages tolocal players.
During an early afternoon visit to an HSBC branch inNancheng District in Dongguan last Thursday, Reuters saw nocustomers while local rivals across the street were busy.
"HSBC has very few branches...After dealing with it once Idon't want to go back anymore," said a man called Huang outsidea nearby ICBC branch, who works in personal finance. (Additional reporting by Michelle Chen, Saikat Chatterjee andLisa Jucca; Editing by Rachel Armstrong)
