One thing I learned about Annabelle
yesterday is that she is an ocean swimmer.
Not to become the CEO of private banking and wealth at HSBC.
It seems to me you have to learn how to swim with sharks, don't you?
And sometimes through uncertainty, if you're growing up in Australia, there
are lots of sharks and there's lots of uncertainty, but you just keep swimming
and you just keep investing. For those missing, the message at the
moment, because every bank does it and defines
it a little bit differently, I think we should start with the basics, which is
where at HSBC is the dividing line between those two businesses of yours,
private banking on the one hand and wealth management on the other.
Thanks. Look, before we talk about the dividing
line, let's talk about the scale of the business.
Sure. So if you look at global wealth at HSBC,
we're about $1.8 trillion in wealth assets in around 30 countries, globally,
a little bit over 30 countries. So that's a very big business in terms
of where the dividing line is. Generally it sits.
We've got obviously the personal bank, then we've got the Premier bank and then
we move into private banking. And that dividing line is around $2
million of investable assets. But obviously it depends on what people
are looking for from a service. And we have to work with our clients and
our customers. Let's talk.
I think people would be interested to know, given the scale of the business,
as you've just described, what the strategic priorities for your businesses
are. Wealth broadly.
But of course, private banking is a bit different from those other two you
mentioned, both globally and here in Asia-Pac.
Sure. So the aim of the entire business is to
be the most admired retail and wealth bank globally for international
customers, period. Then for the private bank, we want to be
the leading private bank for Asian, international and entrepreneurial
clients again, globally. And we obviously want to be the leading
wealth manager in Asia, period. And we believe that we can absolutely do
that. I think the more interesting question is
how and particularly what are our competitive advantages.
So I just want to outline three of them. The first is obviously our Asia
strength. I'd be remiss to be sitting here in Hong
Kong and not be talking about our Asian strength.
We've been in Asia a tremendously long time.
We're deep in many of our markets. We're expanding in so many markets.
So for the private bank, we've gone onshore in India, in Thailand, we're
expanding. Obviously, we've done a recent
acquisition from Citigroup in China, really deepening our presence,
obviously, and offering wealth now in the Philippines as well.
So significant deepening presence in importantly one of the fastest growing
wealth markets in the world. So absolutely key that we're in Asia and
that we're taking that wealth with Asian desks in Europe and in the US and around
the world. Key there, international connectivity.
You just heard Eddie talk about it, actually.
That's an incredibly important part of HSBC.
Not only is it in our name, but that's what our clients expect from us and
that's what we deliver. Whether it's that Asia to the Middle
East corridor or whether that's it's the client in Hong Kong who's got the
children who are going to school in the UK, going to college in the US.
They need a mortgage, they need a bank account, and they want to make sure they
get exposure to European and US equities.
All of that is something we facilitate. Plus of course, all of their business
accounts, which is our third competitive advantage, which is collaboration.
We happen to be attached to one of the world's best global business banks with
all of the ability to help our clients grow their businesses from innovation
right through to multi-generational businesses and serve their wealth across
that geographic footprint that you just described, where are you investing most
aggressively? So when we look at for clients or for
ourselves, build a business, actually, let's say we're kind of putting our
money where our mouth is along with our clients.
So to build the business in Asia, heavily doubling down in Asia, this is a
huge region for us, more so than everywhere else.
I would say it's absolutely a priority for the group.
So if you look at where we've put our money, we've we've launched in India,
we've done it for the private bank in India.
We've launched a business, we've acquired an asset manager in India, four
in China, mainland China. We have launched a private bank and
we've also reinforced our asset management business.
They're also growing our insurance business through South East Asia and our
acquisition in Singapore. So we're deepening in all of the areas
that you would expect us to be in Asia. But we're also growing in the Middle
East because, as Eddie said, a huge growth area, a lot of connectivity to
Asia and a lot of investment going there.
But in order to be a global private bank and a global business, you need to
invest across the entire platform in people for that personal connectivity
and in technology and investment products and capabilities to make sure
that you as a bank, you are a holistic service provider for anything that your
clients might need. $1.8 trillion in assets is certainly
nothing to sneeze at. But as you well know, there are some
true behemoths in this industry. Morgan Stanley and UBS at the top of the
heap with $5 trillion or more in assets between their private banking and wealth
management franchises. Bank of America is up there in the four
plus trillion dollars neighborhood. I just asked everybody in this room to
make a prediction about where certain things are going to be five years from
now. Where will HSBC, private banking and
wealth assets be five years from now? I can't possibly make that prediction in
five years. But what I will say is when we look at
the growth in Asia, our expectation of the growth in Asia is 8 to 10%.
Our expectation in the US is similar and we look at the rest of the world growing
on average around 6% in wealth assets on basis on an annual basis.
What I and this is regionally not specific to this is regional in
specific, not specific to HSBC. And I would absolutely expect HSBC to
well and truly outpace that growth. So in excess of ten plus percent year in
excess of ten plus, we expect to gain market share.
So as I look relative to what we. From market growth.
We expect to gain market share. We talked well, we will be talking and
David certainly talked to you about some of the geopolitical backdrop.
How is what we see playing out across the world affecting the strategic
decisions that you make and your appetite for investing in certain parts
of the world over others? You know, one of the things about HSBC
is we've been around for over 150 years. We've seen a few things.
We've seen a few things. Our job around the world is to connect
the various parts of the world. So we will continue to invest, to
connect the various parts of the world and advise our clients as we advise
ourselves to continue to diversify and make sure that we're taking advantage of
all of the pockets of opportunity and obviously diversifying, too, to manage
the risks. I'm going to ask you a tough question,
at least a tough one for this crowd potentially.
The pandemic helped to supercharge the Hong Kong versus Singapore rivalry,
particularly the effort by both cities, as you've just heard from Eddie Yu, to
attract wealth and in particular family offices.
Who's winning, Annabel? You know, Asia is winning.
So as you as you look at that growth rate that I went through, you've seen a
tremendous growth in Hong Kong. You've seen a tremendous growth in
Singapore. And you just heard me talk about the
expected growth. But we also have to remember that we're
seeing in mainland China a tremendous growth also there.
We know obviously we're investing in India.
We believe India is the investment destination of the decade.
That's an area of growth as well. So one of the reasons that we see our
competitive advantage being based in Asia is the wealth across Asia.
But I want to be fair and answer your question a little bit.
Okay. I just want to give you one tidbit that
is really revealing of the growth in Hong Kong and I think reflects some of
the trends and the things that it is talking about.
So if you look at the first quarter of this year, we opened more more than
130,000 retail wealth accounts in Hong Kong.
60% of those have international near to no international.
So that gives you just a little bit of a tidbit of the growth in Asia, but also
what's happening in Hong Kong and the success of Hong Kong in this growth.
There is real competition among these centres and it's not just Hong Kong
versus Singapore. Obviously the Middle East is doing its
utmost to attract as much wealth as possible.
Dubai in particular is a center that I would highlight.
And of course, London is still doing its part to retain a stranglehold on as much
of the world's wealth as it can. And then, of course, there's New York
and other financial centers. Eddie just told us that he wants to hear
from institutions like yours about what more Hong Kong needs to do to attract as
much wealth as it can. What are you telling him?
What more do you want to see? What I enjoyed about listening to him is
that he's listening to everybody. Right.
So what I heard was amounts going up. That's pretty important.
I heard channels widening. I heard a discussion around more
interesting product. And what I heard overwhelmingly was the
importance of looking at what the client wants.
So he talked about the importance for rising affluence in Asia, in particular,
obviously in mainland China and access to diversification.
So I think he's thinking about all of the right things.
I was really delighted to hear candidly this morning.
So is there any one thing in particular that you'd like to see Hong Kong do on
top of what it's already done and what you've heard him say?
I think one of the things that he was saying was this nexus to the Middle
East, that's really important. So when we look at our business, I would
agree with him, particularly on the trade, the bit that we are working on
and where we're taking our clients from Asia to the Middle East and from Middle
East to Asia. And we've had a series of of exchange
trips for some of our private bank clients, but also for some of our
business clients is getting the people relationships right.
It's really important in Asia to get the people relationships and introduce
people. Well, guess what?
It's really important in the Middle East as well.
I think that's the power that HSBC is bringing to our part of the equation,
but also to get those businesses introduced to each other and make sure
people deeply understand the investment options across those markets into the
markets, too. So we don't just say Middle East and and
Asia. It's getting into sort of Hong Kong,
U.a.e, Qatar, Kuwait, Bahrain, etc., Saudi.
So really understanding more deeply. And that's what I heard him saying.
And that's something that we passionately believe are acting in it is
against as well. There is some evidence and you be aware,
may be aware of it that this. Rush to sign up as many family offices
as possible, or at least in the rush, some people who shouldn't be able to get
a registration either because they're crooks or because they're charlatans,
are in fact, squeaking through. And I have to imagine that that creates
problems for institutions like yours. If you have a registered family office,
they'll come to you and say, Here's my registration.
I want all these services. And then at the end of the day, it
proves to be vaporware. Are you worried at all that in this
rush, there's the possibility or the potential, I should say, for something
of a race to the bottom? We have to be eternally vigilant.
And this is not a regulatory problem. It's not a bank problem.
It's not a it's not a country problem. This is a everybody in it together
really have to make sure that as we build these markets and we build these
businesses, that we make sure that we all do our diligence and we build a
market with integrity and we bank the right people in the right way.
That is the core. The core focus of all of our banks is
trust. That's how banks exist.
And we need to work with our clients to make sure that we understand them and
they understand us. We heard Eddy also talk about his
interest in creating an opportunity within a regulated framework for more
mainland capital to come to Hong Kong. At the moment, mainlanders are limited
to transferring roughly the equivalent of about $50,000 a year outside the
country. Of course, much of it is coming to Hong
Kong. However, it's also clear that much,
much, much more than that is coming to Hong Kong.
And I wonder, how do you handle such situations?
At HSBC, there's this enormous opportunity to serve the wealth, but
perhaps some questions as to its provenance.
We ask those questions, and if we're not comfortable with those answers, then we
can't. KYC comes first.
This is an absolute lie, and that's our obligation to ask those questions.
And we make sure that we do, because, as I said, the integrity of the market and
the relationship between the client and the bank must be absolutely transparent.
Can we talk for a moment about what it is that these clients we've been
describing in very nebulous terms actually want from the bank?
What is it? You know, again, you heard Eddie talk
about the flavor of the month, private credit, for example, whether it's
private credit or other things. What are they asking for?
So quick set of answers. So with respect to what are they really
asking for? They're asking for global
diversification and asset class diversification at the moment.
Obviously, they want access to everything, all the appropriate
investments around the world, and they want them in every form, whether it's
whether it's infrastructure or alternatives, private credit, private
markets, any form of those things. The second thing they want, though, is
global connections, which we also talked about absolutely critical because people
are looking to go local globally. That's what we're providing.
The third thing is technology. Make my life simple.
Make it make it easy. Make me sophisticated.
Absolutely important. And the fourth thing that we haven't
talked a lot about is purpose. So what is happening right now is one of
the biggest wealth transitions that we've ever seen in the world.
In fact, period, the biggest wealth transition.
People are looking to invest in their legacy at at the private bank end and
really think about what does the generations after them look like their
their legacy, their philanthropy. But everyone is also looking at climate
transition and climate change. So it's all of those four things.
Now, in the market, it's a longer answer.
I'm glad you brought our technology, because I have one last question for
you. No conversation, it seems these days is
is complete without some kind of a nod to artificial intelligence.
And I can see how AI has that has potential, you know, as a customer
facing a tool or in a customer facing role at the lower end of your wealth
business, where people expect some degree of automation, but does it fit
into the private bank? It's such a high touch business and such
a personalised business. Is there room for artificial
intelligence there? So you'd expect in retail wealth we're
looking at everything and you're right. So a private bank, the relationship with
the personal relationship with the client is absolutely paramount.
However, there's tremendous opportunity for AI to make sure that the role of the
of the relationship manager and the investment counselor is as supported
with all of the sophistication that we can possibly get to really help them in
that relationship with the client. But there's actually also some very cool
trading tools out there that our global banking and markets folks are working
on. For those of you who know what I'm
talking about, A.I. Markets, I think there's lots of room
for us to work together and that's something that we're doing.
So I think there's tremendous potential in AI and everyone should be exploring
it, whether person. Or from an investment perspective.
Either way, and certainly in businesses. Annabel, thank you very much.
Ladies and gentlemen, please join me in thanking Annabel Spring.
Thanks. Thank you.
