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.”


Mexico objects to labor enforcement provision in North American trade deal

Updated 15 December 2019

Mexico objects to labor enforcement provision in North American trade deal

  • Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage
  • US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico

MEXICO CITY: Mexico’s deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top US trade official expressing surprise and concern over a labor enforcement provision proposed by a US congressional committee in the new North American trade deal.
Top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of a quarter-century-old deal, aiming to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
How labor disputes are handled in the new United States-Mexico-Canada Agreement (USMCA) trade deal was one of the last sticking points in the negotiations between the three countries to overhaul the agreement.
Intense negotiations over the past week among US Democrats, the administration of Republican US President Donald Trump, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage.
However, an annex for the implementation of the treaty that was presented on Friday in the US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico.
“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Seade wrote in the letter. “And, of course, we disagree.”
USMCA was signed more than a year ago to replace the North American Free Trade Agreement (NAFTA), but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before voting.
The letter, released on Saturday, is dated Friday and addressed to US Trade Representative Robert Lighthizer. Seade said he would travel to Washington on Sunday to raise the issues directly with Lighthizer and lawmakers.
“Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted,” Seade wrote.
Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance with union rights at the factory level in Mexico by independent labor experts.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which became public only on Wednesday.