Bloomberg News
GENEVA - HSBC Holdings PLC is creating a holding company for HSBC Republic, its biggest private banking division, as the company tries to simplify the legal structure of its business for the rich.
"Creating the new holding company in Switzerland will help HSBC Republic rationalize its legal structure, be more capital-efficient, and integrate its international private banking businesses efficiently," the company said in a statement.
London-based HSBC joins British rival Barclays PLC and other European banks, including Deutsche Bank AG, in putting private banking in Geneva, which is recognized as a hub of financial services for wealthy people. Financial institutions in Geneva manage assets worth an estimated $1.2 trillion, more than half of all money in Swiss funds or private accounts.
"A Swiss branding" also carries advantages, said Clive Bannister, chief executive of HSBC private banking, in a recent interview.
HSBC bought Republic New York Corp. in 1999 and put it under HSBC USA Inc., the holding company for its U.S. operations. Founded by the late Edmund Safra, Republic had gained a large reputation in private banking. The transaction included the purchase of Safra Republic Holdings SA - the holding company for a group of banks in Switzerland, France, Luxembourg, Guernsey, Gibraltar, and Monaco - and doubled the private banking operations of HSBC, Britain's largest bank by assets.
The company's private banking pretax profit, before goodwill, rose to $522 million last year from $206 million in 1999.
HSBC has more than 4,000 employees in its private banking units worldwide. About 3,300 of these work for HSBC Republic, which at the end of 2000 managed more than $135 billion of assets.
The banking company also sells private banking products through Zurich-based HSBC Guyerzeller, which targets the ultrarich; HSBC Trinkhaus & Burkhardt in Germany; and Credit Commercial de France, acquired last year.
