HSBC's top execs set to move to HK in pivot to Asia

LONDON • HSBC Holdings is considering the return of some global leaders to the bank's original home town, reinforcing Asia's role as its centre of gravity.

A cadre of senior executives is set to relocate in the coming months to Hong Kong from HSBC's Canary Wharf headquarters in London, say sources, as Europe's biggest bank pares its global ambitions.

Chief executive Noel Quinn will begin marketing what is known internally as the "pivot to Asia" today when he announces 2020 earnings.

Moving the trio - Mr Nuno Matos, chief executive of wealth and personal banking; Mr Greg Guyett, co-head of global banking and markets; and Mr Barry O'Byrne, chief executive of global commercial banking - would mean businesses responsible in 2019 for 95 per cent of net revenue will be run out of Hong Kong.

The impending reset comes just 12 months after an overhaul that called for cutting 35,000 jobs, about 15 per cent of the total, over three years.

But chairman Mark Tucker told the Asian Financial Forum conference last month that the pandemic has upended those plans. "Economic realities mean that what we were planning to do in February we need to be even more urgent in doing."

HSBC will probably report that pre-tax adjusted profits fell to US$11.7 billion (S$15.5 billion) last year, close to half of 2019, largely driven by soaring bad debt charges amid the pandemic, according to the average of 19 forecasts on the bank's website.

Its shares, which tumbled last year, have gained about 11 per cent so far this year, though they have lagged behind rivals such as JPMorgan Chase & Co and Banco Santander.

"The potential at HSBC is from simplification, de-duplication, and increased digitisation," said Mr Edward Firth, an analyst at Keefe, Bruyette & Woods. "That... is the opportunity, rather more than any 'pivot' to Asia or some other such strategic reset."

Cost-cutting aside, Mr Quinn told top managers at an internal presentation this month that investment will focus on Asia, and Britain and the Middle East.

Seeking avenues for growth, he said, the bank wants to become a market leader in wealth management. It is now a relative minnow in the business compared with some of its international peers.

While HSBC's private bank manages less than US$400 billion of client assets, UBS Group, the world's largest wealth manager, looks after customer funds totalling about US$2.6 trillion.

Mr Tucker told the Asia conference that there were "real opportunities to grow our wealth business and expand across South Asia".

He said China's Greater Bay Area, the economic hub of more than 70 million people encompassing Hong Kong and several other southern cities, provides "substantial opportunities".

HSBC's private bank managed US$361 billion for its clients at the end of 2019, according to a June 2020 company presentation. However, the unit generated 1.8 per cent of group adjusted pre-tax income in 2019, according to Bloomberg data.

HSBC's global asset management division managed a further US$506 billion of assets at the end of last year, of which Asia represented about a third.

The focus on Asia involves more than economics.

China's crackdown on Hong Kong has increasingly forced HSBC to accept criticism in the US and Britain as a cost of doing business.

Mr Quinn was summoned to testify to British lawmakers this month over the lender's decision to close the accounts of an exiled Hong Kong democracy activist.

HSBC is expected to announce a withdrawal from consumer banking in the US when it unveils the earnings, the Financial Times reported, citing unidentified people.

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A version of this article appeared in the print edition of The Straits Times on February 23, 2021, with the headline 'HSBC's top execs set to move to HK in pivot to Asia'. Subscribe