HONG KONG - HSBC Holdings, Europe's biggest bank, expects to see consolidation in the financial industry later this year and in early 2010 that will create buying opportunities, Chief Executive Michael Geoghegan said on Tuesday.

The London-based lender expects the remainder of the year to be uncertain, with further corporate defaults on loans, another executive with the bank said in Hong Kong.

We always have a history of acquiring things while others have to sell, Geoghegan said in a response to a question at a shareholders' meeting.

HSBC is one of three banks vying for the Asian assets of rival Royal Bank of Scotland (RBS.L), sources have told Reuters.

Earlier on Tuesday, HSBC said it won approval for its Chinese unit to issue yuan currency-denominated bonds in Hong Kong, becoming one of the first two foreign banks able to do so as China looks to develop the offshore market for the yuan.

Stuart Gulliver, head of global banking and markets at HSBC, said the bank would look to issue a yuan bond in July, depending on market liquidity, and the size of the offering would be in line with those of similar issues in Hong Kong by Chinese lenders.

Five mainland Chinese banks have issued yuan currency bonds in Hong Kong since 2007, raising 20 billion yuan ($2.93 billion) between them, Gulliver said.

HSBC's London shares gained 4.23 percent on Tuesday after finishing 6.3 percent higher in Hong Kong amid a broad market rally.

(US$=6.8241 yuan)

(Reporting by Clare Jim, Editing by Jacqueline Wong)

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