HSBC, the London-based investment bank and financial services provider, is offering its ultra-rich clients in Asia direct access to its investment bankers as it targets to become a leader in managing wealth in an increasingly affluent region.
The bank, which makes the bulk of its profits in Asia, has opened a new institutional family office in Hong Kong (China) and Singapore, which will give access to a full range of financing and investment products, deal making and institutional market access, the lender said in a statement.
HSBC is investing $3.5 billion and hiring more than 5,000 new wealth planners to grow its business in Asia over the next three to five years as part of a broader shift to the region. Like other banks, it has struggled with low interest rates over the past years and is seeking out more fee-based income to boost profitability.
“We are seeing greater interest from Asian clients who are setting up and expanding family offices, to adopt institutional approaches to build continuity, diversification and resilience in their investment portfolios,” Siew Meng Tan, regional head of HSBC Private Banking, Asia-Pacific, said in the statement.
The announcement comes as many banks are reeling from more than $10 billion in losses triggered by the collapse of US-based investor Bill Hwang’s, who lost nearly $20 billion in late March. HSBC was able to sidestep the issue as HSBC CEO Noel Quinn said that the lender had no direct or indirect exposure to it.
The disaster has led regulators, lawmakers and consumer advocates to push to expose the inner workings of family offices, which are closely held and lightly regulated, yet manage an estimated $6 trillion for the ultra-rich globally.
HSBC is competing with global banks including America’s Citigroup and Switzerland-based UBS Group, as it seeks to bring in billionaire clients. Asia-Pacific has 831 billionaires, more than any other region, according to a recent report.
In the next decade, about $1.9 trillion of wealth in Asia will be passed on to the next generation, HSBC said. Globally, HSBC Private Banking attracted $13.1 billion of inflows in the first quarter of 2021, up from $5.4 billion in the same period last year.