Hsbc Holdings Plc, which has the largest network of overseas banks in China, is planning to apply as a qualified overseas institutional investor to invest in the country's Class-A shares and bonds.

"We ourselves as a bank will apply for QFII and it will involve us putting in US$50 million," Dicky Yip, chief executive of HSBC's China business, said in an interview.

Chinese authorities need to tell HSBC if it is allowed to choose itself as a custodian bank when applying as an investor, said James Wong, the lender's senior vice president of custody and clearing. The current rules do not address the issue.

HSBC and two rivals - Citigroup Inc and Standard Chartered Bank Plc - last Friday said they had received approval from Chinese authorities to act as custodians for foreign clients who want to invest in the country's stock market. They may also help foreign clients, such as insurers and mutual funds, keep Chinese stocks and settle purchases.

"This is a business where we expect immediate revenue from our investment, compared with other businesses where we have to wait for a long time," Yip said. He declined to give figures, but said: "As a percentage of China business, it's very substantial, but less than half."

HSBC is in talks with potential foreign investors, mainly investment banks, to apply for the QFII licenses on their behalf, Wong said, without naming them.

Wong expects to set up the first batch of funds for QFII clients as soon as May.

Approvals for the QFII licenses can be granted in 30 days, after which clients with at least US$10 billion in assets can begin investing in China's stocks.