HSBC aims to increase its Asia private banking headcount by two-thirds in five years and double client assets in eight as it eyes a bigger share of the business in the world’s fastest-growing wealth market, top executives said.
The lender’s private banking expansion plan in Asia, which accounted for 75 percent of group-level profit last year, comes as the unit that caters to the rich is focusing once more on growth after years of painful restructuring.
“Asia is the key driver for future profitability in the private bank … it’s been the driver for growth even through the difficult times and it’s always remained profitable,” Peter Boyles, CEO of HSBC’s global private banking business, told Reuters.
HSBC’s Asia private bank will add 700 people by 2022 from a headcount of 1,100 at the end of 2017. The increase will add staff in various roles including relationship managers, product specialists and family wealth planners, said Siew Meng Tan, Asia Pacific head of private banking.
HSBC’s global private banking business manages $330 billion (£253.69 billion) worth of clients assets, and Asia accounts for 39 percent of the total, making it the single largest market for the bank.
It also aims to double Asia-based client assets by 2025, in-line with consultant Capgemini’s overall wealth growth forecast in the region over the same period, as it expands its presence in the banking hubs of Hong Kong and Singapore and also vies for a bigger share of offshore Chinese wealth, Tan said.
Asia has emerged as the main battleground for global wealth managers, with higher economic growth, rapidly rising wages and a thriving entrepreneurial ecosystem producing rich clients at a pace faster than the western world.
Asia Pacific accounts for 34 percent of the world population of high net worth individuals, or those having investable assets of $1 million or more, and 31 percent of their wealth – ahead of North America, as per Capgemini’s 2018 wealth report.
Clients with more than $5 million of investable assets are served by the bank’s private banking unit, while those with less than that threshold are taken up by HSBC’s retail banking and wealth management division.
HSBC’s private banking business had a torrid time following embarrassing data leaks in 2008 allegedly showing tax evasion by clients, prompting probes into the tax affairs of some of its Swiss account holders in a number of European countries.
The bank in 2015 admitted failings in compliance and controls in its Swiss private bank in the period up to 2007. It has since then taken significant steps to implement global standards and tax transparency initiatives.
The private banking unit, which brought in just over 3 percent of the bank’s adjusted global revenues in 2017, shrunk its footprint and exited some clients in the last few years as it sharpened its focus on compliance and profitability.
“We have done the repositioning work and we are now seeing net growth coming through because the drag effect from business exits has now diminished,” said Boyles, who took over his current role in 2012 and spearheaded the restructuring.
“We actually had a first year of growth for many years, both in assets under management and in net profit, in 2017. And moving into 2018 we have seen continued progress,” he said.