Strategy

HSBC’s Braunwalder Expands on Plans & Results

Contributing Editor, Geneva, 17 March 2005

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HSBC Private Bank (Suisse) saw pretax profit rise by 26 per cent to $620 million in 2004 and net new money swell by $18,8 billion. “These ar...

HSBC Private Bank (Suisse) saw pretax profit rise by 26 per cent to $620 million in 2004 and net new money swell by $18,8 billion. “These are a good and healthy set of results,” Peter Braunwalder, the bank’s chief executive, told WealthBriefing.

Growth is been particularly strong in Asia, according to Mr Braunwalder—around 90 per cent of the Swiss bank’s business is generated offshore. “We have strong links with this part of the world and this is obviously helping us.”

One of the biggest contributors to growth has been the Swiss-based hedge-fund operations. The entire HSBC group finished 2004 managing $23 billion in hedge funds and expects that to grow to $30 billion by the end of this year, making it one of the largest hedge-fund managers worldwide.

Pressed on whether his part of the business is looking to acquire a competitor, Mr Braunwalder said a very firm yes. “We want to place the bank in the top two or three in Switzerland—to be there with UBS and Credit Suisse.”

The former UBS banker did not rule out an acquisition of one of the mid-sized Swiss private banks, but suggested that Julius Baer, the Zurich-based bank, was unlikely to be a contender. “I’m not sure if it would add a lot of value to the business. There would be too much duplication of functions.”

The private bank in Switzerland has been actively promoting its image throughout Switzerland and this has helped to generate clients. It has sponsored the Yehudi Menuhin Music Festival in Gstaad for three years. “This has been extremely successful for us,” said Mr Braunwalder, “it always generated business and helps us with existing client relations.”

Mr Braunwalder believes private banks have to think more imaginarily about how to engage their clients in the 21st century. As part of this process, HSBC invites some of the bank’s top clients to talks from various well known individuals in their particular field. Recent invites have included the famous hedge fund investor Jim Rogers. “This year we plan to invite a futurologist,” he said.

Despite the bank’s strong profit performance, analysts question the growth in net new money. “This was only up by 9 per cent in 2004, which is similar to what we’ve been seeing in Swiss-based offshore private banks. But I think it suggests an overall slowdown in offshore money growth, which is unlikely to change in the future,” a Geneva-based analyst told WealthBriefing.

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