Stuart Gulliver, group chief executive and Asia-Pacific chairman of HSBC, has underlined the "tremendous importance" of the wealth management division to the global banking group.

Stuart Gulliver, group chief executive and Asia-Pacific chairman of HSBC, has underlined the "tremendous importance" of the wealth management division to the global banking group.

At a press conference held in Hong Kong yesterday, following the bank's informal meeting of shareholders, Gulliver talked about the UK- and Hong Kong-listed bank's strategy for growth globally and in Asia-Pacific.

This year the bank has outlined plans to cull 3,000 jobs in Hong Kong as part of a cost-cutting strategy, and exited retail banking divisions in South Korea, Japan and Thailand. But Gulliver insisted that the bank's commitment to wealth management was stronger than ever.

“Wealth management is core to Hong Kong, it's core to the UK, and it’s core to 18 other markets," said Stuart Gulliver at the conference, flanked by HSBC group chairman Douglas Flint and Asia-Pacific chief executive, Peter Wong.

"There are 18 countries where we have a (wealth management) presence in. What we’ve done by exiting places like Korea and Japan is to get out of mass retail banking in countries where we don’t have the size and scale to compete against the domestic banks who are also doing mass retail banking. If you take Japan for example, we can’t compete with the indigenous Japanese lenders."

"But wealth is a tremendous opportunity for us in many parts of Asia, like Australia, Singapore and Malaysia. We are in the part of the world which will see disproportionate GDP growth, and so huge wealth creation over the next few years.”

Gulliver pointed to targets HSBC had announced for the wealth management business this time last year, emphasising that they are on track to reach their goals.

“We had an investor day last year where we set a $4 billion additional revenue target for wealth management by the end of 2013. There was a $300 million marginal net new revenue in 2011 from the wealth initiative, equating to a margin of 6 or 7 per cent increase on the underlying platform.”

“But to put it into context, how do you get to $4 billion? Well, we have 4.5 million premier customers, so what we want to do is make another $1,000 from each customer. So it is absolutely achievable.”

Exits, cuts and hires

Gulliver declined to say what additional regions the bank would be exiting in Asia this year. "We’re trying to sell things at the best possible price for our shareholders, so we cannot disclose any information ahead of a sale. It is also mean to the staff.”

The bank outlined plans last year to exit 28 businesses where it lacks scale, part of a paradigm shift to restructure its business, target growth markets and curb costs by up to $3.5 billion by 2013.

On the subject of redundancies, Gulliver said that there may be fewer than originally thought. "We communicated a maximum number of 3,000 cuts in Hong Kong, but the detailed work has come up with a much smaller number. Yes, some jobs have gone, but we are actually hiring in some areas too. The overall global net reduction so far is 16,000 versus a 30,000 total. But we are not aiming at the total, we are aiming at a redesign of the firm. It may be a smaller number than 30,000, it certainly won't be larger."

Importantly, the number of cuts excludes employees who have left the firm because of sales of business, said Gulliver. There are another 13,000 who have left the firm due to sales, including the 195 branches sold this week in New York, to First Niagara Bank for approximately $1 billion.

Relocation

Gulliver, HSBC's former head of investment banking who was appointed in September 2010 to replace Michael Geoghegan, relocated to Hong Kong prior to his departure, as part of the bank's growth recovery plans in the wake of the financial crisis.

Recent reports have suggested the bank will follow suit and relocate its group headquarters from the UK to Hong Kong too. But at the conference, chairman Douglas Flint remained tight-lipped on the matter, saying that the bank needs to wait to see what regulatory changes on capital adequacy and territorial legislation will be made before deciding where its headquarters will be.

"Until its clear what the global regulatory framework will look like, we will defer making a decision."