The formula for success at HSBC USA is simple apply locally what works globally.
Whether you are from Hong Kong, London, or New York, you recognize the HSBC name, said Leslie Baines, a senior executive vice president at HSBC USA. There is nothing that can compete with name recognition.
Ms. Baines heads the wealth management and private banking division at HSBC USA, the London banking companys New York subsidiary.
U.S. banks can expect strong competition in the hotly contested wealth management business as HSBC, which was originally based in Hong Kong, builds on its international strengths with new television and radio ads and marketing aimed at wealthy Asian-Americans in New York City.
The trickle-down philosophy has already helped the London-based bank wring the most out of its purchase Dec. 31 of Republic New York Corp. for $10 billion.
HSBC had first-half net income of $327 million from investment products 39.3% more than it and Republic New York had combined from investment products in the first half of 1999. First-half cash earnings rose 75.4%, to $444 million, and the wealth management divisions assets under management have jumped 18%, to $84.8 billion.
The growth in the first half of the year was very strong, and it is all sustainable growth since its all purely organic, Ms. Baines said. HSBC is a strong organization, and all we are doing is building on what works.
Analysts credit HSBC for learning from a badly executed deal 13 years ago for Marine Midland Bank, of Buffalo. HSBC paid $770 million for Marine Midland, and lost $300 million over the next three years on the deal.
There are a lot of identity issues in the Northeast, with all the banks merging and acquiring one another. But HSBC has done a terrific job of integration, said Geoffrey Bobroff, an analyst at Bobroff Consulting in Providence, R.I. They have built a better institution by drawing out the strengths from the firms that they purchased.
Ms. Baines, who had been a senior vice president at Republic, said success begins with a strong distribution network. After the rebranding of Marine Midland last year and the integration of 52 Republic branches upon completion of the merger, the HSBC banner hangs on 450 branches in New York State more than either Chase Manhattan (360) or Citibank (180).
A key distinction between the Republic deal and the earlier purchase, Ms. Baines said, has been the quick transformation of the acquired company. Republic is part of the HSBC family, she said. There was never any divide.
Strong distribution has meant growth for the wealth management groups divisions - asset management, insurance, and private banking.
The asset management divisions assets under management rose $1 billion, to $79 billion, in the first half, and funds under management rose 7.5%, to $45.9 billion. Ms. Baines said a midcap equity fund introduced in May has grown to $100 million of assets under management.
Life insurance sales in the past six months have matched sales for all of 1999. Ms. Baines said the unit expects that insurance revenues will double in the second half thanks in part to a broadcast marketing campaign for its Senior Secure Life Insurance. The product, introduced in May, is aimed at 55-to-75-year-olds and does not entail their taking a physical.
The campaign, which will air 271 television and radio spots a week, begins today and is slated to run till yearend.
Volume is up and our new products are performing, Ms. Baines said. We are taking what works and building on that.
Ms. Baines said a key for HSBC USA is to build on the parent companys reputation in the Asian-American community. The private banking division has hired a team to focus on that community in New York, including phone operators who speak Mandarin and Cantonese; in its first three weeks the team has accumulated $100 million of assets.
We have seen a significant surge in trading, especially among our Chinese clients, Ms. Baines said.
Burton Greenwald, an independent consultant based in Philadelphia, said HSBC has reaped dividends from having an aggressive parent company and intelligent marketing.
HSBCs relationship with Merrill Lynch is particularly intriguing, Mr. Greenwald said. In London and in Asia, Merrill Lynch products are sold in HSBC branches, but that relationship has not yet translated in the United States.
An American partner isnt necessary, but considering they have a relationship offshore, a relationship with a U.S.-based subsidiary would be very interesting, the consultant said.
Ms. Baines said the possibility of becoming a distribution channel for Merrill Lynch products in the United States has not been discussed, but domestic growth will continue, she said.
In the fourth quarter the wealth management division will launch HSBC Premier. The account is specialized for individuals with $75,000 or more in investable assets and will let them transfer funds from brokerage accounts to savings and checking accounts with a platinum card at any automated teller machine.
We have done well with wealth management and are growing it, Ms. Baines said. Investments and investment products are what separate us from the competition.
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