HSBC aims for growth with ring-fenced bank
HSBC has become the last of Britain’s big four banks to launch its ring-fenced UK bank, as it steps up aggressive growth plans for its domestic market.
The UK business has been carved out of HSBC, which is Europe’s biggest bank, to comply with state rules designed to prevent a re-run of the last financial crisis. It has 14 million customers and will be based in new offices in Birmingham.
The entity was formally launched yesterday under the leadership of its first chief executive, Ian Stuart.
Customer data was migrated over the last few months. HSBC’s group chief John Flint, who replaced Stuart Gulliver in February, has made expansion in the UK – particularly in the mortgage market – a central plank of his three-year strategy for the lender.
The UK business has been left with more financial firepower as a result of the ring-fencing restructuring, in the form of a generous capital buffer it can use to support its growth plans.
Ian Gordon, analyst at Investec, said: “Not unreasonably they see the UK mortgage market as an attractive opportunity to grow from a low base. Things move slowly at HSBC but they’re moving in the right direction.”
HSBC had struggled to persuade staff to relocate to Birmingham from London, despite offering a cash incentive, and has filled most roles with new hires. It follows RBS, Lloyds and Barclays in spinning out a domestic bank, with Santander last to follow ahead of next January’s statutory deadline. The regulations are meant to protect consumers and businesses from another financial crisis.
According to regulators, if an investment bank fails, the associated retail bank would have its own capital and separate IT systems, and remain safe.
However, some analysts including those at UBS have questioned this, arguing it may actually make lenders less flexible and more prone to collapse.
UK Finance, which represents lenders, has said the industry will closely monitor the impact of the changes.
