‘I’m back for good’, HSBC tells wealthy Indians over 3-Michelin-star dinner

ON A rainy July evening in Mumbai’s central business district, HSBC Holdings announced to about 100 wealthy Indians it is returning to private banking in India, where it exited about eight years ago.

Over dinner served by the chef of Odette, a three-Michelin-star restaurant in Singapore, the bank’s wealthy clients who flew in from Hong Kong and Dubai, mingled with HSBC’s local customers. HSBC’s efforts to convince prospective Indian clients that its wealth management services in the country will not make a retreat again is a linchpin for its ambitious plans there.

“Today, the South Asia and South-east Asia region put together is the rising star of global wealth,” Nuno Matos, HSBC’s global head of wealth and personal banking, said in an interview this month in Mumbai. “India is critical for our leadership push in wealth in Asia.”

The firm saw invested assets in India more than triple in 2022 from a year ago and expects this to continue growing at a fast pace, according to Matos. It also grew its non-resident Indian customers 9 per cent over the same period. HSBC plans to recruit more than two dozen wealth bankers for this fresh effort, people with knowledge of the matter earlier said.

The optimism towards expanding in this market marks a departure from previous scepticism, that had prompted firms like UBS Group and Morgan Stanley to quit the private banking business in India. With wealth now booming, global banks such as Julius Baer Group are once again training their sights on servicing the Indian rich.

Julius Baer, which moved to a new office in New Delhi this month, aims to double headcount and triple assets under management in the country within the next five years. India used to be “the gift that never gives”, Rahul Malhotra, the firm’s head of private banking for global India and developed markets, said in May at a conference. “It’s giving now.”

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At HSBC, where Asia contributed the majority of net new money in the first quarter, the lender is betting on its global heft to get ahead in the South Asian country. Businesses in India want to make acquisitions overseas, and some of the 32 million expat Indians need wealth management services, according to Matos. Its India private banking operation is aimed at professionals, entrepreneurs and their families with investable assets of more than US$2 million.

“The fact that this region is growing fast is creating a significant amount of wealth pools which reside domestically or move abroad to international hubs,” Matos said. “What we are doing in the case of India is to double down on both sides.”

Profit boost

The wealth and personal banking business contributes over a third of HSBC’s overall pretax profit and may become an even bigger driver as central banks pause hiking rates, according to Matos. Net fee income in the business fell in 2022 from the previous year as activity from rich clients was subdued, given the market volatility.

“Wealth does not like high rates and had customers on the sidelines waiting for clarification on when this rate cycle would end,” said Matos. “This business will grow much faster than now when rates start falling.”

Matos said he is “one quarter an Indian” as his grandfather hailed from Daman, once a Portuguese colony in the South Asian nation. While he visits key markets around the world about two times a year, this is Matos’s third visit to India during the period, underscoring the importance of the market.

As the Mumbai dinner with grilled beetroot tartare and wild mushroom dumplings ended, Matos assured clients seated at four long tables that the bank, whose history in India traces back 170 years, will not leave the private banking business in the country again.

“It was a tough road in India then, and now it’s becoming a much cleaner road,” Matos said. “Our strategic clarity is also very much aligned with that, and I expect us to be here in a hundred years celebrating the successes.” BLOOMBERG