HSBC private banking sees revenue growth on Asia boost

London-headquartered HSBC aims to increase its onshore presence in China, home to an eighth of all billionaires’ wealth worldwide and where it is one of the few global banks to operate a private banking business. (AFP)
Updated 27 November 2019

HSBC private banking sees revenue growth on Asia boost

  • “The strategy to achieve double-digit asset and revenue growth is working”: executive
  • Asia has emerged as the main battleground for global wealth managers

HONG KONG: The private banking business of HSBC Holdings is aggressively pursuing double-digit growth in client assets and revenue, riffing off a surge in Asian wealth, the unit’s chief executive told Reuters.

Antonio Simoes also said that the London-headquartered bank aims to increase its onshore presence in China, home to an eighth of all billionaires’ wealth worldwide and where it is one of the few global banks to operate a private banking business.

“The strategy to achieve double-digit asset and revenue growth is working,” said Simoes, who assumed his role in January. “And as part of that, Asia is by far the region that is growing the most.”

With higher economic growth, rapidly rising wages and a thriving entrepreneurial ecosystem producing rich clients at a pace faster than the West, Asia has emerged as the main battleground for global wealth managers.

Assets managed by HSBC’s private banking unit rose 9.4 percent in the first nine months of 2019 to $338 billion, while revenue rose 4.6 percent versus the same period a year earlier to $1.4 billion. The unit is the smallest contributor to group revenue at 3 percent.

Asia accounts for 42 percent of HSBC’s total private banking assets, making it the single largest market. The region also accounts for the biggest share of the bank’s overall revenue.

But six months of often violent pro-democracy protests that have convulsed Hong Kong — one of Asia’s two main wealth management hubs along with Singapore — have triggered concern about rich clients looking for alternative centers.

Simoes, however, said his business in the Chinese territory had not been impacted. “Our third-quarter results showed very resilient performance for Hong Kong against the backdrop of what’s happening,” he said. “From a private banking perspective, we continue to have targets for Hong Kong that are very ambitious.”

Simoes said the private banking business was sticking to its target announced last year of adding 700 people to its Asia unit by 2022 from a headcount of 1,100 at the end of 2017. Three hundred bankers have already been hired so far, he said.

HSBC’s private banking growth plans come as interim CEO Noel Quinn reviews the lender’s worldwide businesses as part of an audition for the full-time role under Chairman Mark Tucker.

Global wealth managers looking to grow in China — where HSBC’s unit is present onshore in Shanghai, Beijing and Guangzhou — continue to consider an offshore business as the preferred route due to regulatory restrictions on investment products and a lack of sizeable physical branch networks.

“Going forward, we want to be bigger in onshore China and we are looking at how to do that as regulations change,” Simoes said. “If you take a 10-year view, we will need to be bigger in onshore China.”


European bank ramps up stimulus package

Updated 05 June 2020

European bank ramps up stimulus package

FRANKFURT: The European Central Bank approved a bigger-than-expected expansion of its stimulus package on Thursday to prop up an economy plunged by the coronavirus pandemic into its worst recession since World War II.

Just months after a first raft of crisis measures, the ECB said it would raise bond purchases by €600 billion ($674 billion) to €1.35 trillion and that purchases would run at least until end-June 2021, six months longer than first planned.

It also said it would reinvest proceeds from maturing bonds in its pandemic emergency purchase scheme at least until the end of 2022.

ECB President Christine Lagarde scotched speculation that the bank could follow the US Federal Reserve in buying sub-investment grade bonds, saying that option was not discussed by policymakers.

The announcement, which comes just weeks after Germany’s Constitutional Court ruled that the ECB had already been exceeding its mandate with a longstanding asset purchase program, prompted a rally in the euro and bond markets.

“Today’s easing measures were another illustration that the ECB means business and stands ready to do whatever is necessary to help the euro area survive the corona crisis in one piece. The ECB will do its part, and it hopes the governments will do their part,” Nordea analysts said in a note.

The bank dramatically revised downward its baseline scenario for euro zone output this year to a contraction of 8.7 percent from the modest 0.8 percent rise it had forecast only in March.

“The euro area economy is experiencing an unprecedented contraction. There has been an abrupt drop in economic activity as a result of the coronavirus pandemic and the measures taken to contain it,” Lagarde said.

She said she was confident that a “good solution” could be found on the legal stand-off with Germany’s top court.