Speaker 1: Is the easy stuff done? The stock's had a great run,
Speaker 1: You've reorganized the business into four divisions. The market broadly
Speaker 1: has been on board so far. But does the tough
Speaker 1: bit now come. You've got to deal with the expenses,
Speaker 1: You've got to figure out exactly what the wealth's division
Speaker 1: and how it's going to function to become this kind
Speaker 1: of global leader.
Speaker 2: Yeah. No, it's a great question. A lot has been done.
Speaker 3: In fact, I think we're very proud about the speed,
Speaker 3: about the scope of what we've been able to achieve,
Speaker 3: and really a very short time. It's been less than
Speaker 3: a year, and I think no one would argue that
Speaker 3: we probably have done more transformation, more change at ithes
Speaker 3: we see potentially in his history, and so we're very
Speaker 3: very proud of what we've achieved. I would love to
Speaker 3: say the easy things have always been done. There's always
Speaker 3: tougher things to do, and particular in an ever changing environment,
Speaker 3: but we have done it quite a lot, in particular
Speaker 3: around the organizational aspects of the change.
Speaker 1: So what does year two bring?
Speaker 3: Year two, I think, in particular for my business, brings
Speaker 3: much more focus on simplification, much more focus on really
Speaker 3: just efficiencies, and that by meaning not just cost efficiencies,
Speaker 3: but just being a better bank, able to respond quicker,
Speaker 3: to be more agile, all the things that really takes
Speaker 3: a long time.
Speaker 1: Do you think some of that's already in the price
Speaker 1: in terms of the share price performance thus.
Speaker 3: Well, I don't know. I mean I think a lot
Speaker 3: of it is certainly in there. I think you mentioned
Speaker 3: the cost You know, as George has said many times,
Speaker 3: we will achieve the cost savings that we have set
Speaker 3: out to achieve. We're very confidence and manager team will
Speaker 3: do that, and so that's fully in training right now.
Speaker 3: But clearly, you know, we have to respond to the environment, clearly,
Speaker 3: to respond to all of the policy changes that are
Speaker 3: coming out from various places. So yes, I think we
Speaker 3: have done a lot. I think we will do more
Speaker 3: to do. I think it will be focused on really
Speaker 3: making the bank taste better, bank operating more efficiently. I
Speaker 3: think probably the stock market understands it.
Speaker 2: In fact, it's a twenty two year high, is what
Speaker 2: it is. So it's an.
Speaker 3: Extraordinary I think positive response for the market.
Speaker 2: But we clearly will always have more to do.
Speaker 4: HSBC has exit a series of businesses lately to focus
Speaker 4: in on that kind of restructuring that you've just outlined
Speaker 4: and the cost efficiency. As the youth would say, there
Speaker 4: might be a little bit of folmo there. Do you
Speaker 4: think you're missing out on this big moment for Europe,
Speaker 4: this big moment for the UK as people look to
Speaker 4: diversify away from the States.
Speaker 3: No, and I think you're referring to what the investment bank.
Speaker 3: The change is there because we have actually had a
Speaker 3: lot more disposals of various types.
Speaker 2: Not really.
Speaker 3: No, And I think the reason being is that we
Speaker 3: were never a bultch back in investment bank, and that
Speaker 3: is something to everybody understand. We were a good investment
Speaker 3: bank in particular where we have scale and relevance, Asia
Speaker 3: in the Middle East being those regions. And if you
Speaker 3: look at how we really perform and what our value added,
Speaker 3: it is really the cross border nature of our business
Speaker 3: and it is really in regions which we have an
Speaker 3: undeniable leadership position, Asia in the Middle East being those
Speaker 3: two regions.
Speaker 2: And thirdly, those are the reasons for the future. Those
Speaker 2: are the regions that will grow.
Speaker 3: Think about ten years from now, it's not going to
Speaker 3: be the same. And you know, I grew up investment
Speaker 3: bank and I understand exactly what everybody's talking about sixty
Speaker 3: percent of the fees are in the United States. How
Speaker 3: we are in the United States in our debt business.
Speaker 3: By the way, we've just reduced our m and a
Speaker 3: inequity business there, so we can still utilize the value
Speaker 3: of the capital markets, which are the largest capital markets
Speaker 3: in the world. Obviously very important to be there. So
Speaker 3: we have a lot of deals that go to the
Speaker 3: US capital markets. That's great, but the future is really
Speaker 3: Asia in the Middle East.
Speaker 4: So critics of that argument would suggest that the experience
Speaker 4: of five years ago during COVID, when Asian markets are
Speaker 4: largely closed and a lot of the investors that were
Speaker 4: very bullish on Asia kind of learned their lesson and
Speaker 4: really pulled out from that kind of exposure. It's taken
Speaker 4: a while to even dip a toe back in. Why
Speaker 4: not necessarily in COVID, but in another circumstance, should people
Speaker 4: increase their exposure to a region that is historically not.
Speaker 3: Always been the most sure bet Because I think that's
Speaker 3: an enormous amount of wealth creation occurring right now in Asia,
Speaker 3: whether it be India or China.
Speaker 2: I think Hong Kong will become even.
Speaker 3: More important capital markets or center for capital markets around
Speaker 3: the world. I think that you see a huge amount
Speaker 3: of capital and trade flows going between the Middle East
Speaker 3: and Asia.
Speaker 2: You have two regions that have.
Speaker 3: An enormous amount of capital and they're exchanging capital back
Speaker 3: and forth.
Speaker 4: But as any of it coming from the States or
Speaker 4: from Europe in much.
Speaker 2: Wester well still there will always be Yeah.
Speaker 3: I mean, if you look at where American companies are expanding,
Speaker 3: they're expanding those two regions. If you look at were
Speaker 3: European companies are expanding, they're not expanding in Europe. I
Speaker 3: think the US is largely done. They're expanding in those
Speaker 3: two regions. The interesting thing, however, is the amount of
Speaker 3: money going from the Middle East into Asia and vice versa.
Speaker 3: I think we have underestimated that is a significant and
Speaker 3: I think permanent trend. And that's where we're there is
Speaker 3: to capture those flows as you have a reordering of
Speaker 3: the world's capital flows.
Speaker 5: Michael, I want to talk about staffing. You talked about
Speaker 5: some of the headwinds floating around the world diplomatically, put
Speaker 5: many of them come from the White House. We've got
Speaker 5: this change on the H one B visa. How much
Speaker 5: does that affect you because we know, it affects tech
Speaker 5: heavily able, so affects finance, it does.
Speaker 3: You know, our operations in the United States are about
Speaker 3: six thousand people, so relatively, it's much less than if
Speaker 3: you're Microsoft or Google or some of the big tech
Speaker 3: companies or some of our American competitors. We had a
Speaker 3: flurry of activity this weekend like everyone else. I think
Speaker 3: it was unfortunate because the initial policy was unclear as
Speaker 3: to whether it was retroactive or perspective. They've now clarified
Speaker 3: that it is perspective, so that makes it much easier.
Speaker 3: I think it was going to be very disconcerting for
Speaker 3: a lot of people, in particular those holders of those
Speaker 3: visas who were traveling abroad.
Speaker 5: But are you having are you instructing staff to stay put?
Speaker 5: Do you think in the longer term you'll have more
Speaker 5: staff based, say in Asia or in Europe.
Speaker 3: You know, again, we don't have a huge amount of
Speaker 3: the h one visa holders. Yes, I think for all companies,
Speaker 3: you know, to pay an extra one hundred thousand dollars
Speaker 3: on top of everything else, it is going to change
Speaker 3: the way we look at staffing.
Speaker 2: I think it for us, it's manageable.
Speaker 3: I think for maybe other financial services companies. Similarly, I
Speaker 3: think for tech companies that is a much bigger issue.
Speaker 1: Can I just come back to this, this question of
Speaker 1: the relationship between the Middle East and Asia and the
Speaker 1: changing kind of nature of global trade. Crety was critic
Speaker 1: just spent three weeks in DC talks about dedollarization, this
Speaker 1: kind of process that is unfolding, this concern that there
Speaker 1: exists in the United States about that. Do you think
Speaker 1: that Do you think that relationship is is enduring? Do
Speaker 1: you think it's been created to a certain extent by
Speaker 1: the Trump administration. Do you are we seeing a reordering
Speaker 1: in bigger, in bigger in sort of in the sort
Speaker 1: of tectonic plates of the world as a result of
Speaker 1: what is happening out of DC and forcing other people together.
Speaker 2: Yeah, we look. It's a very good question.
Speaker 3: The answer is, I don't know, because I think the
Speaker 3: policy changes quite a lot.
Speaker 2: I think clearly, if.
Speaker 3: You're not going to have the dollar as the reserve
Speaker 3: currency that forces a major reordering of the world's economic
Speaker 3: structure as we know today, I think there is concerned.
Speaker 3: I've talked to many investors, those in Asia and elsewhere
Speaker 3: who are quite concerned as to what this means there
Speaker 3: is no alternative.
Speaker 2: That is the reality.
Speaker 3: There will not be an alternative for many, many years,
Speaker 3: and so tomorrow. If the US dollar is not the
Speaker 3: reserve currency, what is. It's not the Romenbee, it's not
Speaker 3: the euro. I mean the actual relative change between currencies
Speaker 3: reserve currencies has not changed for the last twenty or
Speaker 3: thirty years. In order to have a significant change, I
Speaker 3: think it takes a long time to do so. If, however,
Speaker 3: there is a major policy change. There is, for instance,
Speaker 3: some discussion of taxing holder foreign holders of US treasuries
Speaker 3: as an example, that would send a signal that yes,
Speaker 3: I think you'll have an evolutionary change. Just because of
Speaker 3: practical reality, you can't do it quickly. But that would
Speaker 3: introduce a significant amount of uncertainty in the world's economic report.
Speaker 4: You talk about Asia and the Middle East becoming to
Speaker 4: follow on, guys question, this kind of new sphere of growth,
Speaker 4: can it still hold the level of innovation, financial innovation
Speaker 4: that you still see from the States. I'll give you
Speaker 4: an example. In the private markets for example, Yes they're expanding,
Speaker 4: but the driver of that financial market innovation things like democratizing.
Speaker 4: For one k's in terms of getting access to private markets,
Speaker 4: in terms of the IPOs, in terms of some of
Speaker 4: the structured products that are out there, it's still driven
Speaker 4: by the large scale American players. Are you still seeing
Speaker 4: some of that innovation being done more organically from the
Speaker 4: Middle East or Asia? Or is this about adopting what
Speaker 4: starts in the States.
Speaker 2: Yeah.
Speaker 3: Look, I think clearly from the financial perspective, the US
Speaker 3: capital market is still the dominant capital market. It's a
Speaker 3: lot of the financial innovation comes from the US. Having
Speaker 3: been there for most of my career so very well
Speaker 3: aware of that. However, I think you'll see one of
Speaker 3: a very quick adoption of many of those type of
Speaker 3: changes into both the Middle East and particular in Asia.
Speaker 3: I think it's not only by the way financial innovation.
Speaker 3: I think it's also industrial innovation technology, which is coming
Speaker 3: out of places like China.
Speaker 2: Fast and furious.
Speaker 3: I mean, I was also in Silicon Valley the week
Speaker 3: before last, I was in Israel last week. I will
Speaker 3: go to China and just to see all of that
Speaker 3: innovation is pretty extraordinary that's going on, and it's just
Speaker 3: not American innovation anymore. So I think that's one thing
Speaker 3: everyone should understand Financially yes, you certainly benefit in the
Speaker 3: United States by having the largest, most liquid financial markets,
Speaker 3: and you have some middle largest banks in the world,
Speaker 3: so that's very helpful as well. But I don't think
Speaker 3: that we'll be confined to the US, and I think
Speaker 3: more and more you'll see US players focusing on places
Speaker 3: like Asia. We see a huge amount of that the
Speaker 3: enflow of US capital into Asia. They will bring technology
Speaker 3: with their Capitalisma what's.
Speaker 4: The PC doing in the private markets? Are you growing
Speaker 4: as fast as maybe some of your peers states look like.
Speaker 3: Part of our restructing is to put all of our
Speaker 3: private credit activities in one place.
Speaker 2: Is not in one place before.
Speaker 3: So we're doing that as we speak, and that gets
Speaker 3: to your question about what are the things we're going
Speaker 3: to be doing going forward.
Speaker 2: It's what I call deep bottlenecking. A lot of those
Speaker 2: issues every bank has.
Speaker 3: This is a problem, by the way, is how do
Speaker 3: you respond to private credit, which is a new type
Speaker 3: of financing, which it doesn't really necessarily fit with the
Speaker 3: conventional wave banks have instructuring.
Speaker 4: Is there systemic risk in private credit?
Speaker 2: We looked at it very closely.
Speaker 3: In fact, we've had lots of discussion internally and even
Speaker 3: on our board. You know, there will clearly be always
Speaker 3: systemic risk. The question is how much leverage there is.
Speaker 3: You know, what would be the trigger for that systemic
Speaker 3: risk is something that we look at very quickly.
Speaker 2: Or very closely.
Speaker 5: Michael Guy started by asking about the restructuring. Ran I
Speaker 5: feared he would h's morale. Look, moral's fine, I mean,
Speaker 5: and no one likes.
Speaker 2: To go through restructuring.
Speaker 3: And the reason we've moved as quickly as we have,
Speaker 3: which I must say again is as quick as we
Speaker 3: could possibly do it is very very sensitive to moral issues,
Speaker 3: very sensitive to being distracted.
Speaker 2: That is very distracting.
Speaker 3: I think we're in a position now to say that
Speaker 3: first phase, that organizational change phase, is coming to an end,
Speaker 3: and that's probably the most important things. Not that we
Speaker 3: don't have more to do, is I asked before we
Speaker 3: will continue to. I think improve the place, make it
Speaker 3: easier for our bankers and our traders and our salespeople.
Speaker 2: That's what we're going to focus on going for.
Speaker 3: That's rewiring and replumbing that by its very nature is
Speaker 3: not quick. And I just told the group the other day,
Speaker 3: bear with us. We know what we're doing, but it
Speaker 3: will take a while. But we're doing, I think some
Speaker 3: very interesting things around AI doing it very interesting them
Speaker 3: digitization that will make their jobs easier, but also plays
Speaker 3: through right to the clients. That is really where we
Speaker 3: see a lot of the value going for