As it moves its structured products capabilities to the region, the UK bank brings retail, wealth and private banking under one umbrella organisation to build up on strong growth in Asian retail and private banking businesses.
HSBC’s new global wealth and personal banking (WPB) business will combine retail banking and wealth management and global private banking becoming one of the world’s largest global wealth managers with US$1.4 trillion in assets. Nearly half of these are from Asia, and structured products represent an increasing portion.
With the latest volatility in markets, the bank have seen increased customer demand and interest in its structure products offering with continuous growth in many of its markets in Asia, according to Mark Surgenor (pictured), Asia Pacific regional head of wealth management, wealth and personal banking at HSBC.
Structured products are one aspect of the more holistic HSBC Wealth offering
“We will continue to invest and work with our internal partners like HSBC Global Markets to diversify our product suites and services to customers,” he told SRP. “This includes innovations in pricing capabilities, new underlying choices - including thematics like ESG, and further investment in digital channels for customers and staff.
“The nature of structured products is that they can be manufactured to meet a multitude of customer needs and market viewpoints, which is important given the context of today’s markets. Structured products are one aspect of the more holistic HSBC Wealth offering.”
The new division will cover the entire spectrum of private wealth, from retail clients to ultra-high net worth (UHNW) individuals. Across Asia, where wealth pools are growing faster than in any other region and HSBC’s wealth revenues grew 12% in 2019 (year on year) to US$5.7 billion, according to the bank.
The UK banking group announced in its 2019 results that it will cut down capital and costs in its underperforming businesses and reduce its work force with 35,000 jobs at risk as it moves to reduce its sales and trading and equity research in Europe and transition its structured products capabilities from the UK to Asia.
Combined resources
While private banking will move under the umbrella of wealth and personal banking, it will remain a distinct brand with its own ‘value proposition’. The combined business seeks to marry new demand as individuals grow their wealth with new products and services across retail banking, wealth, asset management, insurance and private banking.
HSBC offers structured products through digital platforms in HK, mainland China and Singapore, though the interface, channel and products available vary by country.
In mainland China, for instance, the bank offers tailor made structured products and dual-currency investments on both mobile and browser channels, according to Surgenor.
“These are powered by the strategic retail brokerage platform (SRBP),” he said. “In Singapore, we launched the Structured Product Online Platform, guiding customers to choose structured products that meet their market view.”
Mobile banking capabilities have been a key focus for HSBC, added Surgenor. “We will continue to invest in digitalising our product offering and enhancing our online platform and services to customers in different segments and needs, extend product offering and even allowing tailor-made products for customers with specific investment needs.”
In 2019, HSBC grew affluent and emerging high net worth clients globally in Premier1 and Jade2, respectively, by seven percent and 14% year-on-year, respectively. Over half of Jade’s total clients globally are in Asia.
Global Private Banking, where profit before tax grew by 19%, attracted a record USD23 billion of net new money in 2019, two-thirds of which were in Asia. 2019 also saw an increase in Asia client assets of 22% to USD151 billion.
“Asia Wealth is a key focus for HSBC and we have made significant investments in our people/capabilities in Asia markets,” said Surgenor. “While we will continue to enhance Jade proposition in Hong Kong, Singapore and mainland China, we will also support structure products enhancement in other markets where we see there are opportunities, such as Malaysia.”
Leading position
The UK banking group was the second product manufacturer globally in 2019 in terms of sales with over US$28 billion sold and a 8.45% market share, excluding China as well as non-retail and flow products.
SRP data also shows that HSBC Bank was the issuing party for over 3,500 structured products (excluding flow and leverage) across seven different markets throughout 2019.
Hong Kong SAR was indeed the most active market by issuance, with 1,524 products launched during the period. Other markets in the Asia Pacific region where the bank was an active issuer include China (564/ US$10.6 billion), Japan (62/US$647m) and Taiwan (62/US$205m). France (12/US$195m) and the United Kingdom 59/US$143m), were the only two European markets where HSBC’s issued products in 2019.
In the US retail market, the bank collected combined sales of US$1.07 billion from 1,078 products sold in 2019, and raised over US$700m across 145 products sold to institutional clients.
More than 50% of the sales volume in 2019 was accumulated via products tied to single equity (index/ share) underlyings or equity baskets followed by hybrid structures (132/US$990m), commodities (30/US$556m) and exchange-traded fund (15/US$226m).
Most HSBC products sold across the world went through the bank’s own distribution network (1,384/US$US$17.6 billion) products however, there were 27 distribution firms selling HSBC products including Bank of America (56/US$1.2 billion), UBS (79/US$420m), First Trust Portfolios (146/US$327m) and Advisors Asset management (120/US$300m).