[ad_1]
Written by Sinead Crews and Lawrence White
LONDON (Reuters) – HSBC’s head of Europe is looking to increase regional assets and boost the division’s contribution to group profits after years of reboots turned a lagging business into a revenue stream. The company is betting on Asian corporate customers expanding overseas.
The turnaround in Europe, some of the details of which are reported here for the first time, raises questions about whether a 2022 campaign by China’s Ping An Insurance Group, of which HSBC is its largest shareholder, could quickly put HSBC into administration. After that, it helped overcome investor skepticism about its “network strategy.” The company’s growing business in Asia was being held back by its huge presence in Western markets, where growth was slowing.
The core of this strategy is that large corporate clients in Asia, many of whom already receive loans from HSBC, will not only benefit from HSBC’s wide range of services in Europe as they expand into the region. The idea is to use it for on-site advice as well. Trading and financing.
In his first interview since taking over the role in February, HSBC Europe CEO Colin Bell said that in addition to generating European revenue from HSBC Europe’s other locations, the bank has He told Reuters that he wants to increase income from wealthy people. “With international wholesale banking at our core, we are becoming more targeted from a strategic perspective,” Bell said, adding that he expects HSBC’s return on tangible equity to increase from less than 1% in 2019 to 2023. It was pointed out that the percentage will rise to 6.7%. Europe accounts for just under a tenth of HSBC’s overall profits.
“The results of all our efforts are starting to show in the numbers.” Ping An asked the bank to spin off its profitable Asian business, but other investors rejected the request. Bank of America analyst Alastair Ryan said investors have stopped questioning the bank’s network strategy for now. “People take it for granted that companies are better off hiring people who can do all the trade finance, foreign exchange payments, cash management and cross-border transactions.” Increased Profits 2016 7 Bell, a former British army officer who joined HSBC in September, was given the task of turning around the company’s long-struggling European business. From 2019 to 2023, HSBC Europe’s annual pre-tax profit rose from $1 billion to $2.6 billion, Bell said. A large part of that was due to the offloading of businesses such as its French retail banking division, which reduced headcount from about 17,000 to just 10,600.
Revenue generated in Europe but booked elsewhere in the bank’s vast global network also rose 40% to $3 billion in 2023 compared with 2022, Bell said.
Bank of America’s Mr. Ryan said rising interest rates were also boosting income from the bank’s vast $1.7 trillion global deposit base, which powers the bank’s international strategy. It may prove difficult for the European division to continue growing at the same pace. In June 2019, Reuters reported that a campaign to attract more European companies under the internal slogan “Europe is business” largely failed as cross-border collaboration with other regions was slow to materialize. HSBC officials said.
The headwind is getting stronger. Competition for European business is intensifying between banks such as BNP Paribas, Deutsche Bank and Santander. The war in Ukraine and tensions between China and the West could also hinder business activity.
FRESH FOCUS But Bell believes there’s more work to be done. He said bullish customers with idle capital in Europe could look to grow in places like Southeast Asia as they reconfigure their supply chains. “We are well positioned to support our customers as they navigate the uncertain situation in Europe and expand into other countries,” he said. Companies from India, China and other parts of Southeast Asia are also looking west for new opportunities, Bell added. Bell said the bank aims to increase assets under management at its Switzerland-based wealth unit by 50% over five years, or about 40 billion Swiss francs ($44.3 billion), prioritizing ultra-high-net-worth clients. That’s what it means.
To achieve that goal, former UBS executive Gabriel Castello, who was appointed to head the business in June 2022, is expected to rely on his relationships with the bank’s corporate banking business. Further growth is expected at HSBC’s Channel Islands and Isle of Man operations, with assets under management expected to increase by around 70% over five years, with targeted recruitment efforts underway. “We have experienced complex and intense changes in Europe over the past three years,” Bell said.
“So now it’s time to meet with clients and have the right conversations about the capabilities we have.”
(1 dollar = 0.9031 Swiss Franc)
(Edited by Kirsten Donovan)
[ad_2]
Source link
