Philanthropy
Trends Converge To Make Philanthropy A Key Private Bank Offering - HSBC
The ageing of the Baby Boomers and the rise of a new entrepreneurial class in Asia, coupled with shifting attitudes about wealth transfer, are driving the rise in philanthropy services, HSBC Private Bank says, while arguing that tax breaks for financial transfers are not a major factor.
The private bank, along with a number of rivals such as Barclays, JP Morgan, UBS, Coutts and Credit Suisse, provides philanthropy advice. In HSBC’s case, it provides the advice both as part of the overall client package and for some services on an additional bespoke and separately-charged basis.
The bank sees the potential for philanthropy advice to be a way of forging tighter relations with clients and their children, Russell Prior, head of philanthropy in the EMEA region for the private bank, told journalists at the firm’s St James’s Street offices this week.
“In my experience [philanthropy] advice does increase the share of wallet…but it is by no means the primary driver…it is about building on a relationship,” Prior said.
He said some clients would come to the bank as a result of enquiries about its philanthropy services.
Recent data highlights that growing wealth in regions such as Asia – a key region for Hong Kong/London-listed HSBC – creates a good platform for such advice. According to the Knight Frank report on wealth trends issued this week, the number of Asian billionaires is expected to surge by 119 per cent between 2012 and 2022, while the European number will rise by 57 per cent.
Asked if tax breaks on certain types of transfers – as can happen with UK inheritance tax laws for example – were a significant driver of philanthropy in the UK and elsewhere, Prior demurred. “I haven’t come across anyone who gives because of tax,” he said, arguing that in any case, many of the clients at his bank were international in nature and all beholden to to their specific national tax laws.
Prior was talking shortly after HSBC reported that pre-tax profits at its global private bank rose by 7 per cent year-on-year to $1.01 billion, while this unit logged a net operating income, before impairments, of $3.172 billion, down from $3.292 billion a year before. On a constant currency basis, HSBC later told this publication, pre-tax profits rose by 8 per cent from 2011.