Awards for Excellence 2017
|Gordon French. Integration at HSBC is bringing demonstrable results|
No matter where head office is based, Euromoney’s best regional bank, HSBC, is fundamentally about Asia. In 2016, the region contributed $10.6 billion out of global profit before tax of $17.3 billion – two thirds of the pie.
HSBC has always had scale, but the story of recent years has been about cooperation. The four constituent businesses – global banking and markets, commercial banking, retail banking and wealth management, and global private banking – were once disparate, but now integration between them is bringing demonstrable results. HSBC reckons synergies among the businesses accounted for 20% of adjusted revenues last year, and all senior staff are well-drilled with examples of how a relationship with a client has matured across multiple businesses just because they are all better at talking to one another.
Examples? HSBC handled 30 high-yield mandates during the 2016 financial year; it says 26 of them came from commercial banking clients. There are Chinese property developers, clients of the corporate bank, who have ended up putting their family office portfolios into HSBC’s private banking arm; there are cash management clients from Bangladesh whose relationships have been parlayed into investment banking mandates. Everyone has a story.
Although truly diverse, HSBC’s engine is clearly Greater China, which generated 79% of Asia pre-tax profit in 2016. Excluding Hang Seng, the bank has 30,000 staff and 300 branch outlets in the region. While the delay in final approval of the bank’s joint venture on the mainland is not helpful, it has not particularly harmed HSBC’s big pitch for the Pearl River Delta (PRD): retail and wealth management clients in the region grew by 51% year-on-year in 2016, and its mortgage loan books in the region grew by the same amount. The PRD is a focus for new products, such as the HSBCnet digital banking platform for SMEs, launched in Guangdong during the awards period.
HSBC’s expertise in international renminbi products and services has paid off as the Chinese currency inches towards internationalization with frequent shifts in policy on the mainland; and the bank is well positioned for the work that will come from the Belt and Road Initiative (BRI), even if the scale of that work can be difficult to quantify. HSBC is represented in more BRI countries than any other bank and has already appeared on a number of large outbound M&A deals from China, none bigger than ChemChina/Syngenta.
There is no obvious weak point at HSBC. When you spend time with its markets teams, you come away impressed at the sheer depth of coverage and expertise. When you meet the cash management, trade finance and securities services teams, you get a clear sense of business that is not only growing but directed and innovative. On the investment banking side, it is an obvious leader in debt capital markets, and not just as a factory for plain vanilla issues but with genuine leadership in key areas such as liability management and high yield.
During the review period, HSBC’s market share grew in areas as diverse as trade finance, Hong Kong personal lending, mutual funds and Australian mortgages. There is a perception that the bank is not as technologically savvy and liberated as Citi or DBS, but it is no laggard, bringing technical innovation across its product set.
The other lasting impression is strength in depth of personnel. Gordon French, head of global banking and markets for Asia Pacific, is the no-nonsense public face of the wholesale bank in Asia. But he is flanked in every area by people who know their business and their market with a depth few peers can match: Che Ning Liu, Martin Haythorne, Stuart Grant, Monish Tahilramani, Alexi Chan and Antony Shaw. It is quite a bench. HSBC is a bank running well in all the right areas.