Dubai: The Middle East is one of the most important markets for HSBC’s private banking business and plays a key role in its global growth strategy, António Simões, Chief Executive Officer, HSBC Global Private Banking told Gulf News in a recent interview.
Currently HSBC Private Banking has a global team of professionals looking after Middle East and North Africa (Mena) clients across a number of offices in the Middle East, Europe and Asia.
“As we continue to invest in this business and as private wealth continues to grow in the region, we aim to increase our Mena book by up to 50 per cent in the coming years and achieve double-digit revenue growth,” said Simões.
$335bAssets under management by HSBC Private Banking
Within MENA, Saudi Arabia and the UAE are particularly important for the private banking. The UAE is one of the eight scale markets for HSBC Group where it continues to invest, and recently the Private Bank relocated to new offices in the Dubai International Financial Centre (DIFC).
“Since establishing an office in the UAE in 2015, we have doubled our revenues and client assets and built out our team. Now we aim to accelerate that growth and double our client assets and revenues again in the coming years,” said Simões.
HSBC Private Banking manages $335 billion in client assets as at the end of first quarter 2019 and is one of the biggest players in international private banking. Almost half of these assets are booked in Europe, with a large part of these managed for Mena clients.
50%HSBC Private Banking’s target to increase Mena book
The bank plans to leverage its growth strategy on its long association with the region. “We know the Middle East really well; our origins in the region date back to 1989. Having offices in a number of Middle Eastern locations such as Dubai, Qatar and Bahrain, we help diversify portfolios and connect MENA clients to leading private banking centres globally, like Switzerland and Singapore,” Simões said.
Many Mena clients opt for a diversified investment portfolio. Increasingly, investors are looking to tap HSBC Private Banking expertise on Asia, and the allocation to emerging market bonds and equities.
Generating income is often an important requirement as well, and within fixed income, we have seen an increasing demand from MENA investors for fixed maturity strategies. Real estate also continues to be an important position in many MENA portfolios, even more so than for clients from other markets. But of course, every client is different and we cannot generalise too much,” said Simões.
HSBC Private Banking sees huge potential for MENA investors is Asia, including China. The bank believes that the consumer sector in China is resilient, as a result of government stimulus and continued growth of household wealth. Education, health care, entertainment and travel are all areas that benefit from the changing Chinese consumption patterns.
In the bond markets, the bank believes, there are attractive opportunities in China, Indonesia and South Korea. Given our Asian heritage, we are ideally positioned to help Middle Eastern clients invest in Asia.
Middle Eastern investors often get proactively involved in investment decisions as they have a strong understanding of markets. Given the volatility in today’s markets, he said, there has been increasing demand for discretionary mandates that cover all asset classes. This allows clients to leave the selection and management of portfolios to the bank, within agreed parameters.
Use of leverage
Simões said Middle Eastern private banking clients do use credit solutions. They have been making use of traditional forms of lending for quite some time to enhance the yield on their financial investments and/or provide liquidity for their needs. Mena clients also use leverage for the acquisition of lifestyle-related assets, including private jets and yachts.
“We are increasingly seeing requests to provide leverage against less liquid assets such as private equity funds and hedge funds. Finally, Middle Eastern clients use leverage to finance their real estate acquisitions, including prime residential properties in prestigious city centres as well as commercial income producing investment properties,” he said.