(Bloomberg) -- Hongkong and Shanghai Banking Corp. has hired Mitsubishi UFJ Morgan Stanley Securities Co. as a lead manager to sell Samurai bonds at a time when Japanese issuers have been excluding the brokerage from deals following revelations of improper business practices. 

The securities watchdog recommended last week the Financial Services Agency penalize Mitsubishi UFJ Financial Group Inc.’s banking units for repeatedly violating its clients’ confidentiality by breaking firewalls and exchanging information among themselves.

Since then, domestic issuers including NEC Corp., Aeon Co. and Japan Housing Finance Agency have dropped Mitsubishi UFJ Morgan Stanley Securities from the underwriting role.

HSBC is looking to issue its first Samurai bond in five years, according to people familiar with the matter. 

Given HSBC is a non-Japanese entity, the common local business practice to exclude brokerages from deals until they have submitted business improvement reports may not apply, according to Yuuki Fukumoto, senior financial researcher at NLI Research Institute. 

“Yet it is possible Mitsubshi UFJ could be excluded afterwards. It depends on the outcome of the administrative action,” he added.

A HSBC spokeswoman in Tokyo declined to comment, saying it is in the process of managing the bond sale. 

(Adds background and comment from analyst)

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