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Inside HSBC’s most ambitious private banking plan for Asia

Inside HSBC’s most ambitious private banking plan for Asia

It has been in all major Asean markets since the 1800s, and started issuing banknotes in 1865 in Hong Kong, Singapore, Japan, Penang, Thailand and seven cities across China.

Today, the business has four onshore booking centres across Singapore, Hong Kong, Taiwan and China and manages $330 billion worth of clients’ assets. Asia accounts for 39% of the total, making it the single largest market for the bank.

HSBC Private Banking has set out a bold plan to further capture Asian wealth by increasing its customer-facing headcount by two-thirds in five years and doubling client assets in eight years by focusing on high-net-worth individuals (HNWIs) living in Singapore and abroad.

It aims to grow wealth revenues in Asia by $1 billion before 2020, with almost half of this revenue growth coming from its retail and wealth management businesses. Insurance and asset management businesses will also be significant contributors.

To achieve this goal, the European lender plans to expand its customer-facing wealth team in Asia Pacific to 1,300 by 2022. Out of that figure, 700 will be allocated to private banking, with 370 assigned to Hong Kong and 300 to Singapore.

What’s more, the private bank is forking out $100 million in digital and technology investments for the region.

Philip Kunz, HSBC’s head of global private banking for Southeast Asia, says the plans are some of the most ambitious in the bank’s history.

Kunz, who re-joined HSBC in September 2017 after moving to UBS in 2010, is responsible for driving and executing the strategy for private banking across Southeast Asia.

Based in Singapore, he boasts more than 35 years of experience, the last 20 of which were in Asia.

At UBS, he held a number of senior wealth management and private banking roles, including client management team head and wealth management chief operating officer for its Singapore office.

‘As all of us have gone through a challenging period, it was extremely refreshing when our newly appointed group chief executive, John Flint, went on stage earlier on in the year and shared with us the group strategy,’ Kunz says.

‘Asean is a substantial part of our growth plans, leveraging our connectivity with Thailand, Malaysia, Indonesia and, of course, domestic in Singapore.

‘This is basically where the story for us begins.’

Master plan

As part of its growth strategy, HSBC’s retail banking Jade business will target HNWIs with $1 million-5 million in investable assets. As clients become more sophisticated and grow their wealth, HSBC will grow with them and support them in private banking.

On the private banking side, the business will target HNWIs with more than $5 million, particularly the ultra-HNW segment with $100 million or more in investable assets.

To further expand its product suite targeting the HNWI segment, private banking will leverage the capabilities of HSBC’s insurance and asset management business.

Kunz says currently, all of HSBC’s products are centrally vetted to ensure strong governance, due diligence and transparency, while balancing it with risk-weighted returns.

He says the product shelf continues to evolve as financial markets fluctuate and investment appetite changes. A key HSBC advantage is its ability to give clients solutions that smaller boutiques and banks might struggle to provide.

Meanwhile, the private bank also plans to tap into its corporate banking relationships across the region. To date, HSBC’s corporate customer base in Asean includes more than 10,000 clients, of which 4,500 are subsidiaries of multinational corporations, and 20,000 small and medium-sized enterprises.

‘If you look at the financials in a group level from a vertical perspective – how much does the private bank contribute in relativity to the commercial bank?

‘HSBC now truly understands how private banking can act as a glue of all things,’ Kunz says.

In Asia, the vast majority of corporate banking clients are private individuals with families who need succession planning. Moreover, given the increasing regulations within the industry, transparency will play into the hands of a universal bank or its private bank within.

Kunz says that in previous years, everybody tried to do bits and pieces by themselves, and there was very little sharing. But HSBC has now taken a universal bank approach, where all the ingredients needed for a successful private bank are readily available.

‘To cement what I mean: what would one of the boutique firms have in terms of corporate solutions that they can offer in the region?

‘The ability to accompany the next generation on their journey around the world as they complete their studies and start taking over leadership positions in the family business is a must-have capability within private banks.

‘And that’s where HSBC Private Banking is going to make the difference.’

 

Talent retention

Currently, HSBC’s Asia Pacific private banking business has a headcount of 1,100. While hiring new frontline candidates is part of its massive Asia growth strategy, the bank is also keen to tap into its global talent pool of 30,000 to groom from within.

The vast majority will be client-facing hires, predominately relationship managers (RMs), investment specialists, investment counsellors and solutions people.

Kunz says the talent pool in Asia, especially in Singapore, remains shallow, and the group needs to constantly make sure the workforce is at the level of knowledge and skill set that’s required going forward.

He is, however, very confident in HSBC’s ability to attract talent. It has no shortage of interest in bringing in high-calibre hires and recruiting internally.

‘Since coming on board, the most important piece that I addressed was to make sure our colleagues recognise that HSBC is already a major player in the private banking industry.

‘I joined at a time when the business had gone through a period of significant reshaping. So, part and parcel of my job was to give the team a new sense of direction and get everyone excited that we are back to growth.’

HSBC is taking a dual approach when supporting its next-generation clients. What this means is that the bank tags a junior banker to the younger generation and a senior RM for the elder counterpart.

‘This helps [achieve] a seamless transition across generations, a more relatable RM to the client and grooms our future private banking leadership team internally,’ Kunz explains.

Fierce competition

Competition is inevitable in every industry, and particularly so in the dog-eat-dog world of private banking. Private wealth has not only advanced to be increasingly sophisticated over the years, but competition has also become incredibly fierce.

Wealth managers who want to survive the rat race must think big to meet evolving client demand, and Kunz is confident that HSBC’s unique value proposition is one that sets it apart from competitors.

‘I am aware of local banks and I respect them as formidable competitors,’ he says.

‘The global reach of HSBC is unrivalled and that is where the difference comes in, because our clients want to go global and not be limited to a country or a region.

‘I have also worked long enough to truly understand the Swiss models, and... they have been highly successful for a very long time,’ he continues.

‘It is my deep conviction that on the back of the changes that we have seen, clients want a private bank embedded in a universal bank that can address all of their needs, from a simple credit card to legacy planning to philanthropy and everything in between.’

Lion's share

While Asean is a substantial part of HSBC’s growth plans, the increase in domestic wealth and international money flowing into Singapore underpin the private bank’s wealth strategy.

Today, Singapore is a top-three offshore booking centre globally, along with Switzerland and Hong Kong. The city-state is well placed at the heart of Asean, with close proximity to emerging wealth.

Perhaps in part thanks to strong governance and political stability, the country manages about $1 trillion in personal wealth. Within that, China, Indonesia and Malaysia are the top three sources of wealth inflows to Singapore, data compiled by the Boston Consulting Group revealed.

‘There is about $2 trillion worth of mainland Chinese wealth offshore,’ Kunz says.

‘Hong Kong, to date, has been able to attract the most, with about 37%, while a staggering 17%, or $320 billion, has found its way to Singapore, according to Capgemini research.

‘Looking at the ever-increasing trend of mainland Chinese choosing Singapore as a financial centre is the main reason why I am bullish on Greater China.’

That, and his strategic desire to capture as much of those flows designated to Singapore, he adds.

'Family businesses are thriving amid a booming middle class, and that’s creating greater opportunity.’

The article was published in the October issue of the Citywire Private Wealth magazine.

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