Laurent Lagueny, HSBC’s head of trade financing in France, was so concerned his client would fail to deliver food to a French supermarket, he jumped in his car and made a 62-mile desperate dash to save their gigots.
The bank’s trade team in Paris had received an anxious call from a wholesaler to say that a €150,000 import of Australian lamb was stuck in port because lockdown had delayed the processing of documentation.
Lagueny drove the paperwork to the port, presented it to the authorities and released the consignment so the client didn’t let down its customer and Parisians stuck indoors could at least tuck into their Easter dinner.
In China, 4,000 shipping containers of meat got stranded, threatening to leave butcher’s shelves empty. HSBC trade finance staff worked flat out to process 250,000 pages of documents, including 2,000 import bills from 1,000 couriers for a leading supplier.
In Italy, HSBC worked with a financial institution to help the government pay for a personal protective equipment (PPE) consignment stuck on the Tarmac in China, while the supplier awaited confirmation of credit. Teams in Italy, London and China prioritized payments and confirmed they were in the seller’s account so the PPE could be released.
It was the right decision to pause the redundancy programme and the right decision now to reactivate it
Noel Quinn
In Canada, Carole Dubois was looking forward to retirement after a 42-year career in banking. But she put that on hold to keep her Quebec City branch running. “I wanted to give back to the community that has supported me over the years,” she says.
HSBC provided $72 million to help a chemicals manufacturer for the oil and gas industry become Canada’s largest producer of hand sanitizer practically overnight and introduced the company to another client that supplied extra bottling capacity.
Every bank has stories of staff making extra efforts for customers. HSBC has lots and lots of them. And its people put in extra effort at a particularly difficult moment. Just before the Covid pandemic hit the western world, HSBC had announced a restructuring and plans for substantial job losses in Europe and North America. Yet its people stepped up around the world.
‘Extra mile’
Were these responses evidence of the type of individuals HSBC recruits or of a careful plan laid out by senior executives?
“It’s a bit of both,” Noel Quinn, HSBC’s group chief executive, tells Euromoney. “I’m very fortunate to have inherited a culture where people try to do the right thing for clients and go the extra mile. That is in HSBC’s DNA. We also made a very conscious decision at the top when Covid hit to mobilize rapidly to support customers and colleagues. We wanted to make sure HSBC, because it has the strength and capabilities, did everything it could to bridge customers through these difficult times.”
The bank required every relationship manager – across premier banking for retail, wealth management, commercial banking and global banking and markets – to contact every one of their customers to ask how they were coping and what HSBC could do.
Quinn and his management team knew that, given the sprawling nature of the HSBC group, putting this principle into detailed action could not be centrally planned.
“We empowered the frontline geographic management in 70 countries to do whatever they needed, whether that was buying thousands of laptops for staff sent home or making entrepreneurial decisions on extending credit to customers. That’s how we were able to respond rapidly,” says Quinn.
That’s a lot of autonomy over lending to grant at a time when it was almost impossible to read borrowers’ creditworthiness.
“In the first three months of this crisis our balance sheet grew by $40 billion,” says Quinn.
By early August, the bank had provided relief on $52 billion of loans to 172,000 wholesale customers and on $27 billion of loans to retail customers, including 700,000 payment holidays.
“I just had a conversation with one large corporate customer whose revenues have been hit particularly hard,” Quinn tells Euromoney. “He was telling me that he could sell one of his prime assets if that would help HSBC to keep extending credit. I said that I didn’t want him to.
“His cash flows were great before Covid. This problem is none of his making. I don’t want him conducting a fire sale in the middle of a pandemic. Our clear message is that this bank is supportive. Now, if this crisis carries on and on and it does come to selling prime assets, that won’t be until we have tried everything else that we can.”
HSBC has had flexible working policies for non-branch staff, but if I’m honest, we haven’t fully embraced it. We will
Noel Quinn
Sometimes, small decisions make a big difference if they can be taken quickly.
When a supplier of medical technology for critical care in the UK needed immediate funding to import ventilators for the National Health Service, HSBC arranged £3 million in just one day. And the bank also fast-tracked approval to all companies providing ventilators, offering preferential pricing and extended payment terms.
As governments around the world sought to extend new loan guarantees to help small businesses, HSBC collaborated closely.
“We offered guidance to governments – in Hong Kong, in the UK, in the US – on how to get these loans out quickly but also safely, with appropriate checks and balances. Some of that guidance on product design and application was accepted; some was not. And again, this was not managed from the centre but locally,” says Quinn.
“In the US, for example, the team put a technology solution together within two weeks and we did far more in PPP [payment protection programme] loans through the SBA [Small Business Administration] than our normal market share would ever have suggested. In the UK, we got websites for CBILs [coronavirus business interruption loans] and BBLs [bounce-back loans] up within one week. And in four months, we did 10 years’ worth of normal small business lending volume in the UK.”
Redundancy programme
And that explains why Quinn paused the HSBC redundancy programme. This was not an easy decision.
Quinn had only been confirmed as chief executive in March after the HSBC board, led by chairman Mark Tucker, spent seven months searching for a replacement for John Flint, an HSBC-lifer like Quinn, who was ousted for moving too slowly to restructure Europe’s largest bank.
As interim chief executive, Quinn had announced another pivot to Asia in February, leaving open the question of whether he would remain in place to implement it. Now, to the irritation of some shareholders, he was suspending the biggest part of the cost cutting.
“Our people were hit from two directions,” Quinn explains. “They were inundated with huge demand to support customers, while many were also concerned about their own and family members’ health and having to look after parents and children. Their lives were already changing.”
Quinn took some flak on this, given the obvious need to re-orient risk-weighted assets from Europe and the US towards the better performing Asian businesses and to cut costs in line with declining revenues as loan demand falls and interest rates collapse.
But if being a leader meant just taking the easy decisions, anyone could do it.
He makes no apology. “It was the right decision to pause the redundancy programme and the right decision now to reactivate it.”
Almost as intense as the effort to support customers was the logistical effort to support staff, which in some cases required chartering planes to transport hardware.
Quinn picks one example. “We have 40,000 people in processing centres in India and all of them suddenly had to work at home where landline connections aren’t good and power supply can be interrupted. We provided them with mobile backup and also bought them power supply. We were delivering laptops from Pune to Bangalore.”
What comes next and what key lessons has the bank learned?
“HSBC has had flexible working policies for non-branch staff, but if I’m honest, we haven’t fully embraced it before. We will in future. And when the leadership team goes back to level 42 in Canary Wharf it won’t be into their own separate offices. It will be open plan with desks we can each use for whatever period we are in the office,” says Quinn.
The other question for HSBC, as for all banks, will be about how much less staff travel compared with the time before Covid. Coming up with the right answer to that involves considerations of staff safety, travel restrictions, the need to visit both long-standing customers and new prospects, and questions of sustainability as enlightened companies pay more attention to the environment.
Quinn says simply: “We will travel less. I want to see my colleagues in Hong Kong, but we don’t need to fly around the world for off-sites.”
