Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Michael Roberts, good to
Speaker 1: see you this morning.
Speaker 2: Thank you for welcoming us onto your new trading floor,
Speaker 2: your new building done in Hudson Yards.
Speaker 1: This is in many ways a statement.
Speaker 2: If I look at the bank and the organization, you
Speaker 2: spent a number of years deconstructing HSBC in the US
Speaker 2: selling assets on the East and West coast. Is that
Speaker 2: deconstruction done and you are fit for purpose today?
Speaker 3: Yeah?
Speaker 4: Thank you manas for being here and answer the question
Speaker 4: is definitely yes. We had a transformation plan that we
Speaker 4: started in twenty twenty, unfortunately right as COVID had, but
Speaker 4: we persevered, we got through it, and we really took
Speaker 4: the bank down to its core and rebuilt it in
Speaker 4: an image that we think is going to be much
Speaker 4: more successful. Focusing on our international core capabilities. We are
Speaker 4: in the main international bank, focusing on trade, focusing on entrepreneurs.
Speaker 4: Before that we were a little more scattered were focus.
Speaker 3: We weren't this discipline.
Speaker 4: Now we are in both in our wholesale businesses and
Speaker 4: our retail businesses. We focus on serving international clients and
Speaker 4: doing so what we think is a very unique way.
Speaker 3: So it is done. We're very happy about that.
Speaker 4: This building is in fact the last piece of the puzzle.
Speaker 4: It's the culmination of all the efforts.
Speaker 2: If I said to you, then where's the concentration going
Speaker 2: to be? Is it going to be built up? Commercial
Speaker 2: banking here in North America serves into Asia and China,
Speaker 2: complementary with wealth management is a double tall.
Speaker 3: Yeah, it is definitely that.
Speaker 4: So we are unique in that we certainly serve wholesale
Speaker 4: clients on an international basis.
Speaker 3: So think of.
Speaker 4: American clients and they maybe small clients up to the largest,
Speaker 4: the largest multinationals. We serve them into Asia, into Middle East.
Speaker 3: And into Europe. That works quite successfully.
Speaker 4: Similarly, we serve those foreign clients operating in the United States,
Speaker 4: and think about a European company or an Asian company.
Speaker 4: The US is the biggest market in the world. They
Speaker 4: want to be here, they have to be here for
Speaker 4: their own strategies, and so we can give them that
Speaker 4: platform as well. What really makes us unique, however, is
Speaker 4: our business and retail and wealth management. It is extraordinary
Speaker 4: because we can serve international affluent wealth management type of
Speaker 4: clients in a way that.
Speaker 3: No other bank can. So think of your sitting in
Speaker 3: Hong Kong.
Speaker 4: You want to buy property in the United States, maybe
Speaker 4: your son goes to a university the United States.
Speaker 3: We can provide the mortgage. We can provide you a
Speaker 3: credit card.
Speaker 4: Ever trying to get a credit card without a fight
Speaker 4: co score in the United States.
Speaker 5: I have tried that.
Speaker 2: But let's just pick up on that because of course
Speaker 2: you bought SVB in the UK, and then you picked
Speaker 2: up forty bankers from SVB, you know, in the wreckage
Speaker 2: of that time over a year ago. Do you want
Speaker 2: to build and buy more wealth management? How do you
Speaker 2: build a wealth management structure here in the US? What
Speaker 2: is the prime objective.
Speaker 3: We're going to build organically?
Speaker 4: We're going to focus really on a very i think
Speaker 4: well defined target market of international clients. We have sort
Speaker 4: of five personas. So think about expats moving to the
Speaker 4: United States. Think about people have business opportunities in the
Speaker 4: United States, but maybe they live elsewhere. Think about expats
Speaker 4: that are American expats moving abroad. So we have all
Speaker 4: those three personas there in fact five in total that
Speaker 4: are there to really be served by us in a
Speaker 4: very unique way.
Speaker 2: If we think that about the commercial banking I'm curious
Speaker 2: to get a sense on this. We're in the foothills
Speaker 2: of a Cold war, right, whatever way you look at it,
Speaker 2: there's more talisman Biden administration, maybe more to come from
Speaker 2: a new administration.
Speaker 5: We have got tariffs, we've got angst.
Speaker 2: Is that steming any of the commercial banking flow from
Speaker 2: America into China or into Asia? Is there any diversion
Speaker 2: or flow or slowed on?
Speaker 4: Yeah, Look, it's a great question, and clearly we're in
Speaker 4: a period of rising tariffs, rising quotas.
Speaker 3: Don't know what the Chinese response.
Speaker 4: Will be to the latest tariffs put on by the US,
Speaker 4: but you know, trade liberalism is certainly in a different
Speaker 4: phase than it was in the past. So I think
Speaker 4: we have to accept that. Our companies have to accept that.
Speaker 4: So a couple of responses. One, we're there to provide
Speaker 4: that advice. Were the largest trade bank in the world,
Speaker 4: we have abilities to really help companies manage their trade
Speaker 4: wherever they may be. So if a client is exporting
Speaker 4: from China, as an example, and once to move that
Speaker 4: production capacity outside of China, we.
Speaker 3: Can help them.
Speaker 4: Where the largest foreign bank in India, we're a significant
Speaker 4: bank in Vietnam, a very big bank in Mexico. So
Speaker 4: we're really there to help them navigate through this unpredictability.
Speaker 4: I think that will continue regardless of what happens in
Speaker 4: the elections. We will have more tariffs, more quotas, a
Speaker 4: less easy trade environment to navigate going forward.
Speaker 5: If I said to you wants the biggest lever for
Speaker 5: the business.
Speaker 1: In the New Yar term, is it going to be right.
Speaker 2: Cups from the fad or a clarity in politics and tariffs.
Speaker 4: I think it's both. I think you need predictability. Companies
Speaker 4: need predictability to make their investments. Investors need predictability. What
Speaker 4: we haven't had really is that predictability. Lots of discussion
Speaker 4: on interest raise, it's a discussion of winning by how much.
Speaker 4: Now you've got the quote uncertainties. I think policy needs
Speaker 4: to be predictable. So if there's a rate cut, fine,
Speaker 4: if there's not, then it's the question of how companies
Speaker 4: then react to that.
Speaker 3: How do they then.
Speaker 4: Build their businesses to exist in a rate environment which
Speaker 4: is higher than it has been the last fifteen years.
Speaker 4: But I would argue that in the last fifteen years
Speaker 4: have been an abnormal rate environment. So if they have
Speaker 4: that predictability, they can adjust their own production they can
Speaker 4: adjust how they run their companies and I think they'll
Speaker 4: do much better, but they need policy predictability.
Speaker 2: But here in lies the point for the commercial mind.
Speaker 2: Then let's just square that away, which is many people
Speaker 2: say to me they've refinanced a great deal, have refinanced
Speaker 2: on the retail retail private side.
Speaker 5: Do you think that's the same for corporates.
Speaker 2: Are they holding back on doing these, doing M and A,
Speaker 2: doing that capital market as a result of uncertain tea.
Speaker 4: Yeah, I think they were in the past. I think
Speaker 4: last year was certainly a reflection of that.
Speaker 5: Uncertainty, and we've jumped over that night.
Speaker 3: We have jumped over.
Speaker 4: I mean, if you look today, the capital markets are
Speaker 4: on fire. We've had seven hundred and fifty billion dollars
Speaker 4: of isisuans in the dech capital markets for investment grade
Speaker 4: spreads are the tighters they've been in a long long time.
Speaker 4: The lot of colo formation of capital for the non
Speaker 4: investment grade market, which I think will continue, and even
Speaker 4: the equity market. We've seen a lot more IPOs, led
Speaker 4: by the tech sector, of course, but IPOs are trading
Speaker 4: very nicely now, a lot more activities, so I think
Speaker 4: that sense of predictability is coming back, yes, and people
Speaker 4: have gotten over whether it be six, five, four, three
Speaker 4: two one, you know, interest rate cuts. I think they're saying,
Speaker 4: you know what, it's going to be a three and
Speaker 4: a half to five and a half percent interest rate environment.
Speaker 3: We just need to adjust to them.
Speaker 5: Put your market on right cuts this year.
Speaker 4: I think if you get one, you'll probably doing pretty well.
Speaker 4: And that's what our helsview is my personal view, you'll
Speaker 4: get one maxim maximum.
Speaker 5: So that kind of a bullish eye like, then what
Speaker 5: is the flow? What is the flow?
Speaker 2: And the book look like here on the on the floor,
Speaker 2: because that's a very bullish statement by the market.
Speaker 3: Where are you in quarter too, Yeah, we're doing well.
Speaker 4: There's been a lot more activity both in the debt
Speaker 4: inequity capital markets, so we feel very comfortable where we are.
Speaker 4: And our goal really is to support international companies coming
Speaker 4: into the United States and as well as helping those
Speaker 4: companies raise capital here, helping our companies raise capital elsewhere
Speaker 4: as well.
Speaker 2: If I said you let's push bark them on a
Speaker 2: little bit, because if you look at where you are
Speaker 2: in debt capital markets and equity capital markets, I would
Speaker 2: say you look, you're not in the top five. You
Speaker 2: know you're quite a way from the top five. Do
Speaker 2: you want to be in the top five? What is
Speaker 2: the ambition for DCM and ECM in that.
Speaker 4: Sense, I want to be good for our clients. I've
Speaker 4: never been a league table guy. I want to focus
Speaker 4: on helping our clients in the way that we need
Speaker 4: for them to help. So, as an example, we're going
Speaker 4: to support a company from the emerging markets who's going
Speaker 4: to be buying a company the United States that we
Speaker 4: need to do from an ad advisory perspective, We're going
Speaker 4: to raise debt in the United States. That is exactly
Speaker 4: the type of transaction that we were going to focus on. Similarly,
Speaker 4: we're helping a company US company buy a company in
Speaker 4: the UK, so we'll use our expertise and our insights,
Speaker 4: our capabilities in the UK market to raise it capital
Speaker 4: as well. So league tables don't really look at them.
Speaker 4: It's really how do we serve our clients. Do we
Speaker 4: do it well and do we do it in such
Speaker 4: a way that we provide them value.
Speaker 2: But then the natural crawllery is that is if you're
Speaker 2: not sort of focused on being on the top five,
Speaker 2: my question would be is do you have the right
Speaker 2: scale to fill this heighthst dining HUDs in yards Because
Speaker 2: obviously it's not the same story in Asia as it
Speaker 2: is here.
Speaker 1: This is a very.
Speaker 2: Different capital markets to what's happening in Asia at the
Speaker 2: right at this moment in time. So are you again
Speaker 2: going back to fit for purpose right size on those
Speaker 2: teams here.
Speaker 3: In the US completely?
Speaker 4: In fact, as you look around this trading floor, it's
Speaker 4: pretty full. We've got about four hundred traders here.
Speaker 2: So you would say, no cuts in America in jobs
Speaker 2: in those businesses.
Speaker 4: I would say, we're fit for purpose, you know, and
Speaker 4: we will always you know, change will always react to
Speaker 4: It's a dynamic process. But we're fit for purpose because
Speaker 4: you have to really look at our operations are here
Speaker 4: to serve not only are you know what we do
Speaker 4: in the US, but globally. So if there is need
Speaker 4: to raise capital around the world, you've got to come
Speaker 4: to the US markets. So we serve hs BC as
Speaker 4: the center of an activity in the largest capital markets
Speaker 4: in the world. I would argue you can't be a
Speaker 4: global bank without being very relevant the United States. We
Speaker 4: are relevant to our clients in the United States. We're also
Speaker 4: relevant and very important for HSBC.
Speaker 2: To accelerate that pump that you've had in business. Do
Speaker 2: you think rate cuts will re accelerate that. I know
Speaker 2: you're on the table for limited cuts, but do you
Speaker 2: think a shift in the rate environment can materially.
Speaker 5: Shift the business.
Speaker 4: I think rate cuts will be important, but not determined,
Speaker 4: so I think yes, it's important to have rate cuts. Again,
Speaker 4: I'll go back to this predictability statement. If rate cuts come,
Speaker 4: it provides predictability. I think you'll see that capital markets
Speaker 4: grow even more.
Speaker 3: I think they're poised to do so.
Speaker 4: As I mentioned, lots of capital formation money sitting on
Speaker 4: the sidelines, but it wants to be.
Speaker 3: Put to work.
Speaker 4: So as soon as we can see predictability, I think
Speaker 4: you'll have even greater growth than the capital markets, both
Speaker 4: debt and equity. And I think we're well positioned to
Speaker 4: takevage of that. We've got lots of discussions going on,
Speaker 4: lots of sentiment is turning positive today, and they're looking
Speaker 4: for that opportunity to fully exploit.
Speaker 2: So we caught up with David Solomon. We wrote a
Speaker 2: story from him yesterday. We caught up with him in
Speaker 2: Paris is what can you tell me about Middle America,
Speaker 2: corporate and Middle America, because he says higher rates, higher
Speaker 2: for longer is beginning to bite, is it.
Speaker 4: I think it's beginning to bite, certainly for consumers. And
Speaker 4: you know, if you think about it, over the last years,
Speaker 4: we've had successive years of inflation, call it fifteen percent
Speaker 4: on a cumulative basis, Wages haven't gone up by fifteen percent.
Speaker 4: So yeah, it is biting for certain segments of the population,
Speaker 4: which is policymakers and as bankers we have to be
Speaker 4: very sensitive to. I think for our clients, they've adjusted,
Speaker 4: you know, again historically, these are rates that we have
Speaker 4: historically seen, you know, three and a half, four percent,
Speaker 4: five percent, and so they can adjust to those rates.
Speaker 4: I think they can do pretty well. So we don't
Speaker 4: see a lot of stress in our credit books. We
Speaker 4: don't see company he's giving up and saying that it's
Speaker 4: too difficult environment there, I think being a little cautious
Speaker 4: until they see rates and where they're going.
Speaker 3: But they're not stopping doing business.
Speaker 4: They're not stopping to grow, and they have a view
Speaker 4: that as long as they can manage in this raid environment,
Speaker 4: they know where the race are going, they know where
Speaker 4: the economy is going. They have policy predictability. I think
Speaker 4: they'll be okay.
Speaker 5: So let's talk about the element in the room. The
Speaker 5: chairman will be here. I have it on good authority.
Speaker 3: The chairman will be here today.
Speaker 2: A little bit later on, he's searching for his third
Speaker 2: CEO in seven years. Yif the three predecessors were Brits,
Speaker 2: is it time for.
Speaker 3: A yank time for you? I don't know. Thank you
Speaker 3: very much.
Speaker 4: As an American, I appreciate that, I'd say this one.
Speaker 4: Noel was a great boss no quinn. He and I
Speaker 4: took our respective roles about the same time, so we
Speaker 4: worked very closely. He was a great supporter of me.
Speaker 4: He was a great supporter of this franchise and really
Speaker 4: an inspiring boss to work for and did a fabuloushop.
Speaker 4: Mark Tucker is leading an effort along with the board.
Speaker 4: They're very focused on getting the right person.
Speaker 3: I don't think.
Speaker 2: I mean, you've been here, You've reconstructed this banking in
Speaker 2: North America. Do you think it is better culturally for
Speaker 2: the people of HSPC to have an internal person versus
Speaker 2: another new person come in.
Speaker 4: Yeah, and look, I think we've got a lot of
Speaker 4: good internal candidates. I think they're clearly as an advantage
Speaker 4: for having someone who knows the institution. I think the
Speaker 4: board's going to take that into consideration. They already had
Speaker 4: a succession plan worked out. They were very focused on
Speaker 4: making sure that they would have a very quick, efficient
Speaker 4: and very targeted succession plan. They're looking at both external
Speaker 4: and external candidates their decision obviously, but I think you
Speaker 4: know very important that you bring the right person in
Speaker 4: who has the right culture, the right mindset, and the
Speaker 4: right set of skills.
Speaker 2: Have you put your hat in the ring? How do
Speaker 2: you intimate to Tucker that you are interested?
Speaker 4: I love my job here, thank you very much for that.
Speaker 4: You know clearly got a lot more to do here,
Speaker 4: lots of opportunity, So I'm very content of what I'm
Speaker 4: doing today.
Speaker 2: Do you hope then that the next CEO has bigger
Speaker 2: ambitions for America? I mean, on quite a serious note,
Speaker 2: it is not you will you lobby hard to grow
Speaker 2: in size here in the US? Is that important in
Speaker 2: the next CEO for you?
Speaker 4: I think it's important that we have the right sized
Speaker 4: business here, Yeah, and that we get the resources, we
Speaker 4: get the attention, we get the support, which we have
Speaker 4: been I think it fits in however, with the overall
Speaker 4: strategy of the firm, So there's not going to be
Speaker 4: an America's only strategy. It's really about how do we
Speaker 4: fit in, how do we provide that value, how do
Speaker 4: we provide those capabilities that the firm needs to really
Speaker 4: be the truly global bank that it is, And so
Speaker 4: I think we can.
Speaker 3: Continue to be a very vital part of that. We
Speaker 3: will continue to grow.
Speaker 4: You mentioned innovation banking, which we're growing already very very quickly,
Speaker 4: and we're very pleased with that. When there is opportunities,
Speaker 4: when it fits the strategy, when it makes creates value
Speaker 4: for the company, that's how we'll grow.
Speaker 5: So if he topped you on the shoulder, would you
Speaker 5: be happy to say is?
Speaker 4: I would say, I'm very happy in my job here today,
Speaker 4: So thank you very much. I got lots to do
Speaker 4: and I'll be spending a lot of time with entertaining.
Speaker 2: Oh well, the fact listen, we have one debate going
Speaker 2: on in York right getting everybody back into offices, back
Speaker 2: into trading floors. Finra are fighting back saying that we're
Speaker 2: offering flexible working. You're probably one of the most flexible
Speaker 2: banks in the world. How do you see that for
Speaker 2: Wall Street? How important is it for Wall Street getting
Speaker 2: back in five days a week?
Speaker 5: What do you say to that?
Speaker 4: Yeah, so Finra has, as you mentioned, changed the rules
Speaker 4: and we're adjusting a court light. So and we're going
Speaker 4: to follow the rules like everyone else.
Speaker 3: We are a hybrid bank.
Speaker 4: What we did not want to do is to force
Speaker 4: people to come back simply at a decree. So what
Speaker 4: we did is we built a building, this building Hudson
Speaker 4: Yards in the financial capital of the world, which really
Speaker 4: reflects a lot of input from our employees of why
Speaker 4: they want to come to the office because we did
Speaker 4: this during COVID and we didn't know.
Speaker 3: If anybody ever wanted to come to the office again.
Speaker 4: And so we built something that is very I think
Speaker 4: conducive to people coming back.
Speaker 3: They want to come back.
Speaker 4: And so today our overall attendance levels are in eighty
Speaker 4: percent before we moved less than forty. We're running out
Speaker 4: of space very quickly, and luckily we just took some
Speaker 4: additional space in this building. So I think it we
Speaker 4: will adjust to the funeral rules. We'll make sure that
Speaker 4: whoever needs to be here five days a week will
Speaker 4: be here five day a week. But I don't want
Speaker 4: to decree people coming back. I want them to come
Speaker 4: back because they want to come back, and they do so,
Speaker 4: and they're productive, they feel good about it, and that's
Speaker 4: essentially the environment we have built today.
Speaker 2: Michael, thank you so much for joining me, and thank
Speaker 2: you for inviting us here to Hudson.
Speaker 3: Thank you very much for coming as well.