Britain's HSBC private bank was once the largest foreign bank in Switzerland. What happened?
With 186 billion Swiss francs, HSBC's Swiss private bank was once the largest foreign player in the Swiss market. The British bank's assets in Switzerland have since shriveled to 52 billion francs. Swiss boss Franco Morra concedes, «We're a different bank today.»
Morra has overseen a dramatic shrinking of coverage by the bank since 2012. «We've withdrawn from dozens of markets and focused on clearly defined segments,» he says. Five years ago, the HSBC's Swiss private bank was a holding for various booking centers; these have now been reduced to just Switzerland and Luxembourg.
«There aren't many foreign banks which book more than 50 billion francs in assets in Switzerland,» Morra told Swiss newspaper«Finanz und Wirtschaft» (in German, behind paywall).
Dramatic Reduction
When Morra began as CEO in 2012, HSBC catered to clients from roughly 150 markets out of Switzerland. Today, he says, the bank only targets roughly 20 countries. Then, the bulk of HSBC's clients in Switzerland had less than 2 million francs in their accounts; today, three-quarters bank more than 100 million francs.
The bank focused on potential clients who already do business with another part of HSBC, according to Morra. For example entrepreneurs who draw cash management or commodity trade finance services from HSBC. More than half the 13 billion francs in HSBC private bank's global net new money came from existing clients, he says.
Super-Rich Stability
In the business with super-rich clients, Morra says HSBC's margins are stable, counter to the wider wealth management trend of sinking profitability.
«The margins are stable because we're not selling clients standardized solutions, and because the client in usually doing business with the whole HSBC group,» according to Morra. Family governance, corporate succession and philanthropy are key questions in this segment, he says.
This has led HSBC to bolster recruiting this year, as finews.com has previously reported. «Our clientele in Switzerland is demanding. That's why we have bolstered our advisor and investment specialist numbers by more than one dozen to more than 300 people,» he says.
No More Large-Scale Theft
Nearly ten years ago, an IT specialist named Hervé Falciani stole data from HSBC on tax evaders and cheats in Switzerland and gave it to French authorities. HSBC was reprimanded for the data breach by Switzerland's regulator, Finma. The bank later invested more than 100 million francs into updating its systems against a similar whistleblower action.
«Cybersecurity is a big issue for all banks. Our IT systems ensure that sensitive data doesn't leave the country. The only data that we can maintain centrally is that which doesn't identify a client,» Morra says. As a result, a data theft of the scale of Falciani's ten years ago is no longer possible, he says.
