HSBC has ditched its conservative approach to hiring in Asian private banking by taking on 71 revenue-generating staff in just 12 months, according to its 2018 annual report. But HSBC traders in Asia may want to tone their bonus expectations after they endured a torrid fourth quarter.
In Global Private Banking, adjusted operating expenses of $1.4bn were up 3% year on year, mainly due to higher staff costs in Asia. More specifically, the division hired “101 new revenue generating employees globally, with 71 in Asia”, according to HSBC’s earnings report. The bank doesn’t provide details of these hires, but it’s safe to assume that the vast majority are relationship managers, because their jobs are revenue focused.
Hiring on this scale is significant both in terms of HSBC’s recent history in Asia and the wider wealth management sector in the region. HSBC is already the fourth largest private bank by assets under management in Asia, but until now it has not been recruiting aggressively. Its Asian workforce of RMs increased by just 20 (from 450 to 470) between 2012 and 2017, according to Asian Private Banker. Meanwhile, of the private banks that have released headcount numbers, only UBS hired on a similar scale in Asia in 2018 – it added 101 RMs. Credit Suisse saw it RM workforce fall by 10.
While newly hired RMs often take six months or longer to get their revenues up to speed, HSBC’s recruitment does appear to be paying off. Revenue in private banking in Asia was up 18% year on year for 2018.
Expect HSBC to continue its hiring spree into 2019. The bank announced in September that it wants to add more than 1,300 jobs in Asian wealth – mainly positions based in Hong Kong and Singapore – by 2022, with about half of these in private banking and the rest in retail. While some of the private banking roles will be for product and support staff, it’s highly likely that many will be RMs.
HSBC’s private bankers may want to spare a thought for their colleagues in the markets unit of the firm’s Global Banking and Markets division. Markets revenues fell 7% in 2018 compared with 2017. Much of the revenue decline happened in the fourth quarter, which HSBC CEO John Flint said was “extraordinarily weak” compared with Q3. “Revenue collapsed in the last few weeks of the year and you don't have any [cost] levers to pull in the final few weeks of the year,” he said. Forebodingly for Asian equities bonuses, Flint also singled out Hong Kong for its “particularly weak” equities markets.
HSBC is not the only firm in Asia whose traders suffered toward the end of last year. Fourth quarter Asian revenue slumped at Credit Suisse in both equities and fixed-income trading, while income also fell at DBS’s Treasury Markets unit, prompting fears of poor bonuses at both banks.
Flint also sounded a warning for HSBC’s equity capital markets (ECM) bankers in Asia. HSBC finished outside Dealogic’s top-10 banks for Asia (ex-Japan) ECM revenue last year, and Flint said China-US trade tensions must ease up before Hong Kong’s pipeline of new listings will open up again.
How do you get a job at HSBC?
If you want to move into an expansionist part of HSBC, you may want to try the Belt and Road (B&R) team, part of the firm’s Commercial Banking business. In its 2018 results, HSBC reiterated that B&R is one of its “strategic priorities” as it aims to be the number-one international bank for B&R business by the end of 2020. HSBC has been hiring China-desk bankers in markets, including Hong Kong, which are likely to benefit from China’s $900bn B&R global infrastructure initiative. The bank recently opened new China desks in Thailand, Macau, Poland and Luxembourg, taking its total to 24. It faces strong competition, however – JP Morgan and Citi are also beefing up in B&R.
HSBC, which made almost 90% of its profits from Asia last year, has also been investing in technology. It spent an extra $400m “in marketing and digital capabilities” in 2018. Some of the firm’s tech spending (and hiring) is focused on Hong Kong, which HSBC uses as a global hub for digital projects, alongside London. HSBC’s report highlights the growth of its PayMe app in Hong Kong, which now processes 3m transactions per month. What kind of experience might get you a tech job at HSBC? Mobile banking, machine learning, and speech recognition are among the priorities for the firm, according to its financial report.
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