It’s been one of the biggest questions in Asian banking over the past few weeks: what will become of David Liao, HSBC’s China CEO and president, whose exit from that role was announced on 11 March. Liao, who had overseen the expansion of HSBC’s mainland business since 2015, was replaced by Mark Wang Yunfeng, and the bank said at the time that Liao would be moving into another senior job.
In the latest managerial reshuffle by HSBC CEO Noel Quinn, Liao has been promoted into one of the bank’s most important jobs, Asia head of global banking and markets (GBM).
Liao’s new position may potentially also come with a pay rise. The man he replaces, Gordon French, was one of HSBC’s highest-paid bankers in the region, reports the South China Morning Post. French started a six-month sabbatical on 15 April, but is expected to explore “other opportunities” within the firm when he returns, according to an internal memo seen by SCMP announcing the reshuffle.
The Asia head of GBM is one of the most critical jobs within the unit, which houses transaction banking, financing, advisory and capital markets. Asia made up 48% of GBM’s adjusted revenue in 2019, according to HSBC’s annual report. The regional profit percentage was not broken out for GBM, but may have been larger. Across all divisions, HSBC generated 84% of its 2019 profit from Asia last year.
Moreover, the 35,000 job cuts announced by Quinn in February (and now on hold because of Covid-19) were targeted not at Asia but at the US and Europe, in particularly the underperforming GBM team in those regions. There was “strong performance across all [GBM] businesses in Asia compared with 2018,” according to HSBC’s 2019 report.
Liao’s power at the bank seems to have been further cemented by other leadership changes, announced at the same time as his appointment, which may have diminished the importance of Europe and the US within GBM. Andre Cronje, the COO of GBM, is leaving HSBC with no successor to his role. Americas GBM head Andre Brandao is staying on but only until the end of 2020 with a further announcement to follow.
Still, Liao faces formidable challenges in his new job. Hong Kong and Singapore are heading into recession, while China suffered a 6.8% contraction in GDP in the opening quarter of 2020, the first fall since it began reporting quarterly GDP data in 1992. A prolonged downturn would likely have a big impact on much of GBM’s 2020 revenue, including transaction banking, a sector in which HSBC is a major player in Asia.
HSBC is releasing its Q1 results on 28 April, and Reuters expects it to follow US banks and report a large increase in provisions against bad loans as a result of the coronavirus pandemic.
In Singapore, HSBC reportedly has the largest exposure among 23 lenders to Hin Leong Trading, the Singapore oil trader which is struggling to repay debts following a collapse in the oil price.
Prior to taking over the China CEO job in 2015, Liao ran HSBC’s markets business in the country. In 2018, he wrote an article on HSBC’s website advocating the continued liberalisation of China’s finance sector.
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