Best bank: HSBC
For HSBC, 2023 was an important year at its UK ring-fenced bank. This delivered its strongest set of results since it was created in 2018, with revenue coming in 36% higher than in 2022. That was in part thanks to higher rates and fat net interest margins, but also to key strategic decisions, such as to make growing market share in mortgages a priority.
For all the outside pressure on the group board to spin off the rest of the world and concentrate on HSBC’s true home market, which is of course Asia, the UK bank contributed a vital 21% of the whole group’s profit before tax.
On a standalone basis, it performed exceptionally, with pre-tax profit in 2023 increasing by 84%. That number is somewhat flattered by the provisional gain on the acquisition of SVB UK. That bold deal, decided over a weekend amid widespread risk aversion among European banks thanks to the US regional banking crisis, is one of the key reasons why HSBC wins our award as the best bank in the UK.
Yes, for 2023 it reported a return on tangible equity of 22.4%, even when excluding the provisional gain on acquisition of SVB UK, a full six percentage points higher than in 2022 when it reported 16.1% RoTE. That is some going for a bank running a common equity tier-1 ratio of 14% at the end of 2023.
But as well as managing returns today, banks need to invest for the future.
That SVB UK deal led to the creation of a new unit, HSBC Innovation Banking (HINV), which brings many exciting growth businesses to the bank in a country with a strong track record of founding new technology companies. By setting itself to deliver the support that they require to grow to the next level, HSBC has, at a stroke, repositioned itself to benefit from the emergence of a new generation of leading UK companies.
Best investment bank: Barclays
Barclays wins the award as the UK’s best investment bank. Even though some investors had to wait for the bank’s investor day in February 2024 to hear it once again reaffirm its commitment to the investment bank, staff in the UK had no doubt of this.
The difficulty was that 2023 was the worst year in UK investment banking that anyone can remember. However, Barclays topped the UK investment banking revenue ranking, with an 8% share, ahead of JPMorgan and Goldman Sachs each with 6.9%.
In the volumes rankings, it came top in debt capital markets, third in loans, fourth in M&A and sixth in equity capital markets. That is a better performance across the board than any rival including even the big US firms.
The bank has always had a standout DCM franchise in the UK. As it strives for the same in M&A and ECM, there were some notable deals.
Barclays was financial adviser and sole sponsor to Harbour Energy on its $11.2 billion acquisition of Wintershall Dea’s non-Russian connected upstream assets. The acquisition is expected to transform Harbour into one of the world’s largest and most geographically diverse independent oil and gas companies, but now with increased reserve life and improved margins, as well as lower greenhouse gas intensity. The deal advances Harbour’s energy transition by shifting its portfolio towards natural gas.
In ECM, Barclays was the only bank to act as global coordinator on all three monetizations by the Thomson Reuters and Blackstone consortium in the London Stock Exchange Group in 2023, which in total represented £6.7 billion of accelerated bookbuild issuance and over a third of total volumes in the UK.
Best international bank: Banco Santander
Banco Santander made important enhancements to its retail and small and medium-sized enterprise offerings in the UK last year.
The bank’s UK operations made an underlying attributable profit of £2.1 billion, a 13% increase year on year.
In retail banking, the bank launched its Edge Up account and broadened its savings proposition. It launched a Financial Support Hub, with integrated budget calculator and financial health check tools, providing customers with the means to make sound financial decisions.
Collaborating with Salesforce, Santander introduced its Navigator platform, a digital tool specifically created to assist UK businesses in scaling internationally and navigating trade-related hurdles.
Santander’s premier fund for alternative SME financing, Tresmares Capital, expanded its presence in the UK in 2023. With £725 billion in capital commitments and a new office in London, its newly launched evergreen fund is expected to invest between £10 million and £50 million in UK SMEs.
Best digital bank: Starling Bank
UK neobank Starling Bank achieved revenue of £453 million last year with a pre-tax profit of £195 million. Total lending rose to £4.9 billion, up from £3.3 billion in 2022, with customer deposits growing by 17% to £10.6 billion.
The bank is now poised to be the first of the UK neobanks to list, having announced three consecutive years of profitability in 2024. After attracting criticism for sharply building its loan business during the Covid-19 pandemic using UK government-backed loan schemes, it is now having to increase provisions against bad loans that were up by 40% by March 2024.
Nevertheless, the bank – which is now led by Raman Bhatia after founder Anne Boden stepped down last year – is diversifying revenue streams through its software-as-a-service franchise, Engine.
Best bank for SMEs: Lloyds Banking Group
Lloyds Banking Group has invested in transformative digital services and to help struggling businesses navigate the challenging economic climate.
The bank launched its mobile-first onboarding journey for sole traders and limited companies, cutting account opening times by 15 times.
It has also rolled out a new digital invoice finance platform, along with the digitization of the bank’s asset finance services and enhanced mobile payment functionalities. This both improves customer experience and supports risk reduction efforts. It has also cut physical correspondence, with six million fewer letters sent per year.
Lloyds also expanded its strategic partnership with PayPoint. The lender is the main processor for card payments across PayPoint’s network of 60,000 small and medium-sized enterprises.
Best bank for ESG: Barclays
Barclays has integrated sustainability across its operations and financing activities, significantly reducing emissions and enhancing its commitment to green investment.
The bank has reduced its Scope 1 and 2 emissions, achieving a 51% and 93% decrease in location and market-based output respectively. All electricity across the bank’s real estate portfolio is now sourced from renewable energy.
It has also reduced financed emissions from its lending book by 44% from a 2020 baseline.
The bank also worked on several important sustainable finance deals over the awards period. These included Porsche’s €2.5 billion sustainability-linked revolving credit facility, VIVID’s £110 million package for energy-efficient homes and a £225 million sustainability-linked revolving credit facility for Watches of Switzerland.
In retail banking, the lender’s Green Home Mortgage initiative provided £845 million in loans to customers for purchasing energy-efficient homes, reaching £3.5 billion in total loans since 2018.
Barclays Sustainable Impact Capital continued to support some of UK’s most innovative green startups. It invested £49.5 million in companies including Nextracker Solar Energy, Ohmium International Hydrocom and NET Power.
Best bank for diversity and inclusion: Banco Santander
Banco Santander has long worked to support diversity and inclusion in its workforce and wider society.
Last year, the bank implemented its Women in STEM campaign, establishing a cohort of 60 participants with the aim of identifying and tackling challenges contributing towards the underrepresentation of women in science, technology, engineering and mathematics. The bank also ran its Women Business Leaders’ mentoring programme which, in addition to traditional mentoring, helped a cohort of female business owners acquire practical skills to help run and grow their business.
The bank also pushed ahead with its Black Talent Programme, part of a broader black inclusion strategy that aims to double the number of black senior leaders. This initiative has supported 100 black employees with leadership development and networking opportunities, aiding their rise into senior managerial roles.
Commitments were also reinforced by signing the Race at Work Charter and setting a target to raise senior leadership ethnicity representation to 14% by 2025. A Financial Manager Accreditation programme was launched to increase black representation in customer support roles.
Among several initiatives focused on social mobility, the bank launched the Santander Universities Scholars programme, supporting 100 scholars from underrepresented backgrounds in 72 UK universities.
The year also saw the bank move into a new UK headquarters, Unity Place, which features inclusive facilities such as gender-neutral toilets and multi-faith rooms.
Best bank for corporates: HSBC
Around 70% of large corporates in the UK are clients of HSBC and the bank topped the loan arranger league tables for a third consecutive year in 2023.
The bank was involved in loans for several largescale infrastructure projects, including a £450 million term loan and revolving credit facility for Edinburgh Airport – a sustainability-linked facility with specific key performance indicators targeting greenhouse gas emissions reduction and youth recruitment.
It was also involved a £200 million loan to Invesco Real Estate to support two stabilized residential build-to-rent assets in London and a £100 million loan to Envision to support early works on its £1.1 billion electric vehicle battery gigafactory in Sunderland.
The bank launched its Fast Track trade finance demand guarantee. This enables real-time, digitally processed transactions, reducing issuance time from the typical three to four days to minutes.
