By Simon Clark
HSBC Holdings PLC has a new plan to find riches in China. It is
hiring 3,000 branchless bankers to search prosperous coastal cities
for wealthy clients who need advice on insurance and
investments.
The venture, known as HSBC Pinnacle, is led by Trista Sun, a
41-year-old Chinese banker with the enthusiasm of a
financial-technology entrepreneur. She has set up a fintech
platform in Shanghai to operate Pinnacle--HSBC says it is the first
foreign company to get a license to do this--and is recruiting
financial planners to roam Shanghai, Hangzhou, Guangzhou and
Shenzhen armed with digital tablets.
Pinnacle is critical to HSBC Chief Executive Noel Quinn's plan
to revive the bank's lagging fortunes with what he calls three
pivots: to Asia, to wealth management and to business that
generates fee income--advisory work, for example--rather than
lending. It is also part of a digital-banking push at HSBC that
analysts say is overdue.
HSBC was founded by British bankers in Hong Kong and Shanghai in
1865 but it has struggled to keep pace with China's breakneck
economic growth and digital transformation. It has also become
embroiled in the geopolitical tensions between China, the U.S. and
the U.K.
Still, Ms. Sun believes HSBC's long history and experience can
give it an edge over newer companies, even as it pushes into
higher-tech areas.
"We probably underestimate the value of traditional financial
institutions," Ms. Sun said in an interview. "It requires expertise
and experience to understand how to manage risk, how to design the
right products, sustainably grow the business."
HSBC has a long history in mainland China and an extensive
reach. In 1984, it became the first foreign institution to secure a
banking license on the mainland since the founding of the People's
Republic of China in 1949. It has about 160 branches on the
mainland, more than any other foreign bank.
But that hasn't translated into big retail-banking profits
recently. HSBC's wealth and personal banking unit lost $34 million
in mainland China last year while earning $4.93 billion of pretax
profit in Hong Kong, a highly lucrative home market for the bank.
Of the 226,000 people HSBC employs globally, 27,000 are in mainland
China and 29,000 are in Hong Kong.
Meanwhile, HSBC faces increasing competition from JPMorgan Chase
& Co., Goldman Sachs Group Inc. and other U.S. banks.
"The American financial services industry is absolutely cleaning
up in China," Sherard Cowper-Coles, HSBC's head of public affairs
and a former British diplomat, said in an online discussion last
month. "The big American banks, the big American investment houses
are making huge progress."
The prize with Pinnacle is a greater share of the money from
China's burgeoning middle class, a group that will swell to 600
million people by 2028, according to HSBC. Ms. Sun's team is
competing with both domestic and international financial
institutions, such as China Merchants Bank Co. and AIA Group Ltd.,
in focusing on about 30 million people who have at least $100,000
to invest.
"We are targeting the higher end of the market and we believe
the right way to engage is a digital and people-blended service,"
Ms. Sun said. Pinnacle's wealth planners advise on life and health
insurance as well as saving for education, retirement and legacy
planning.
"HSBC has chosen the right strategy and now the challenge is
execution," said Richard Leung, the former head of UBS's private
banking unit in China and a former HSBC banker. "HSBC should look
at their customers and say, 'what can we offer that local banks
can't?' They would expect HSBC to offer something
international."
Ms. Sun said she would explore offering global insurance for
critical illness and high-end medical services and is also drawing
on know-how from other markets.
Others are less optimistic. Anne Boden, the founder of British
digital startup Starling Bank Ltd., is skeptical that the venture
can succeed.
"When an industry disrupter isn't led by a founder, but instead
by a company employee who can go back to their corner office if the
venture fails, it lacks the absolute drive to succeed," Ms. Boden
said.
Ms. Sun's friends say she could have been a billionaire had she
accepted a job offer from Alibaba Group Holding Ltd. founder Jack
Ma in 2004. Ms. Sun declined because she had already committed to
joining HSBC.
Since then, Alibaba has grown into an online commerce behemoth
with a market capitalization that is more than five times bigger
than HSBC's $122 billion. And Ant Group Co., the Alibaba affiliate
that Mr. Ma controls, has become a fintech giant. Alibaba's shares
have more than tripled since its 2014 initial public offering in
the U.S., while HSBC's U.S.-traded shares have fallen 46% in the
same period.
Ms. Sun grew up in Wuxi, a city of about 5 million, before
studying journalism in Shanghai. After a brief stint in television
she started a sales- and leadership-training company.
"I was more interested in the business world," she said.
She has worked for HSBC in Hong Kong, London and Shanghai. She
recognized the threat to traditional banking from technology when
an entrepreneur wearing a black hoodie spoke at an internal
conference in 2015. He told the bankers they were "old and out"
because startups would take business away from them.
"I do remember the discomfort I had during that session," Ms.
Sun wrote on LinkedIn recently.
Current and former HSBC executives say Ms. Sun is a strong
leader. A few years ago, she attended a gathering of global retail
bankers. Stuart Gulliver, then HSBC's CEO, told the audience that
most markets outside Hong Kong and the U.K. were insignificant for
HSBC--a tough message for employees working in those locations,
people who attended said. Ms. Sun spoke up, saying HSBC connected
the smaller centers into one global market, the people said.
"She was articulate, made her point well and did so with a
smile," one of the people said. "Stuart reacted to the challenge
well."
Frances Yoon contributed to this article.
Write to Simon Clark at simon.clark@wsj.com
(END) Dow Jones Newswires
March 24, 2021 05:44 ET (09:44 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Hsbc (LSE:HSBA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hsbc (LSE:HSBA)
Historical Stock Chart
From Jul 2023 to Jul 2024