Why HSBC’s Asian investment bankers could soon become private bankers

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A sector-wide shortage of external candidates could prompt HSBC to transfer existing employees – including investment bankers – into Asian private banking roles to fulfil ambitious new headcount targets that the firm has just set itself.

HSBC announced last week that it wants to add more than 1,300 jobs in Asian wealth management – mainly positions based in Hong Kong and Singapore – by 2022, with about half of these in private banking and the rest in retail. This longer-term headcount goal is in addition to HSBC’s plans, revealed just last month, to boost its global private banking headcount by 240 by spring 2019, with most of the new hires based in Asia.

Kevin Martin, Asia Pacific head of retail banking and wealth management at HSBC, has sought to downplay the 2022 target, telling Bloomberg that 1,300 more staff is “not a big scary number” given that HSBC’s APAC retail unit, including subsidiary Hang Seng Bank, currently has a headcount of 31,000.

Hiring private banking relationship managers within this overall recruitment drive, however, will not be straightforward. RMs are the most critical function within private banking because they generate the most revenue, but they are also the trickiest to hire because they are thin on the ground in Asia and several banks – from Morgan Stanley to Deutsche – are trying to expand their RM ranks. Two-thirds of private banks in Hong Kong said a “limited talent pool” was their biggest supply-side constraint, according to a report published this month by KPMG and the city’s Private Wealth Management Association.

HSBC has not disclosed how many RMs it wants to bring on board as part of its 2022 plan, but two headhunters we spoke with estimate that the number will be over 150. While other private banks in Asia, notably Julius Baer in 2016, have expanded at a similar rate within a shorter time frame, triple-digit hiring is unfamiliar territory for HSBC of late. Its Asian RM workforce increased by only 20 (from 450 to 470) between 2012 and 2017, according to Asian Private Banker.

“HSBC’s private bank hasn’t been aggressive in its hiring in Asia, and growth has been limited over the past few years as a result,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group. CEO John Flint and new head of global private banking Antonio Simoes are now trying to change HSBC’s “conservative” approach to hiring in Asian wealth, he adds.

‘Hiring’ new RMs won’t always mean poaching them from competitors. Bloomberg reports that some of the overall private banking headcount increase (which includes people in product, compliance and other jobs) will come via internal transfers. Headhunters say this is almost certain to be the case for RM roles, too.

“We’ll see people moving within HSBC to become private banking RMs,” says Sen. “They won’t just come from premier banking, but also from investment banking and corporate banking. Because HSBC is such a large bank in Asia, it can source quality RMs internally for specific markets.”

Still, the new expansion will require HSBC’s Asian private bank to hire from rivals such as UBS, Credit Suisse and Citi like never before.

“HSBC is one of the best respected banks in the region and new RMs shouldn’t generally face a challenge in ‘selling’ the bank to their clients,” says Sen. “But there could sometimes be challenges if an RM’s client already banks with HSBC or they don’t like its products. HSBC approaches client portfolios very conservatively and those who want to take more risks or get higher credit may not find favour with the firm. If an RM needs a flexible geographical coverage, managing clients in several Asian countries, then HSBC may not be the best place to be either.”

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Image credit: danielvfung, Getty

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