Chris Meares is chief executive officer for Group Private Banking at HSBC. Before his appointment in November 2006, he was responsible for HSBC Private Bank’s businesses in the UK, Channel Islands and Luxembourg, and was the global head of its trust and estate planning businesses.

Chris Meares is chief executive officer for Group Private Banking at HSBC. Before his appointment in November 2006, he was responsible for HSBC Private Bank’s businesses in the UK, Channel Islands and Luxembourg, and was the global head of its trust and estate planning businesses.

How is HSBC Private Bank going to differentiate beyond focusing on clients, having a global network and giving some client access to investment banking services? And do you feel the need to differentiate amongst the large international players who can also do this?

We have all of these and more, but the difference will be in the delivery. We have 90 offices in 35 countries which can deliver the full range of services, so we are truly global, although we do have a gap in Africa. But this geographical and product reach only means something if it works for clients.

Our long standing presence on the ground in emerging markets enables us to provide services on the ground but also gives access to these markets for clients globally, especially in the high-yielding areas of real estate and private equity. Linking up with Commercial Banking in various regions of the world is also something we can assist clients with.

The HSBC brand helps us around the world, but we recognise the need to spend more money on marketing to continue to raise awareness.

We see our direct international competitors as UBS, Credit Suisse, Deutsche, Citi and JP Morgan. Merrill Lynch and Morgan Stanley are on our radar but we regard their focus as being on brokerage in the US. Coutts and Barclays Wealth are obviously competitors in the UK.

What are your growth plans? In today’s competitive environment, how are you going to recruit enough relationship managers to achieve this?

Over the last four years we’ve seen compound growth of 23 per cent in the Private Bank. This has been more like 30 per cent in the last two years, and although new wealth may not continue to be created at an unprecedented scale we will try to sustain organic growth.

The intra-group partnership is working better now than it was several years ago. Last year 20 per cent of new client assets was generated this way, which was the equivalent of $6 billion in assets under management. Referrals work the other way as well.

We’re lucky that we’re strong in areas of high economic growth. For instance we opened six new offices in India and have just announced our plans to enter the Chinese market.

When we acquired Republic we were mainly a deposit-taking organisation. Now we offer a much more diversified investment service. For instance, at the moment we have around $40 billion in hedge fund assets for our clients.

Our workforce has been growing at a rate of 9 per cent per annum in the last few years, which means we are adding over 600 new positions each year. And client facing staff are increasing as a percentage of the overall total.

We can make the back office more streamlined but client-facing staff are the fuel of the business – they’re what makes the difference.

Our remuneration model is competitive, but we’re not competing for staff purely on the basis of who can pay the most. We’re looking for people who share HSBC values and who are looking for a long-term career and who are keen to benefit from our emphasis on talent management.

And we want to take on farmers as well as hunters – with the growth in assets we need people who can look after them.

It’s certainly not just about getting new assets in. We don’t have a hire and fire regime and, to an extent, we want work to be fun.

Our recruitment is extending beyond the traditional private banking areas, for instance the luxury brands industry. Recruiting from the investment bank has not been a particular focus for us, but we are taking staff from the commercial bank and are recruiting graduates, particularly those with language skills.

Our graduate recruitment scheme has been in place for five years. In this, we focus on accelerating people through in roles in which they are effective, for instance hedge funds, investment advisory groups or research teams.

We also recognise the value of older staff members – we like to have a balance and to offer flexible working arrangements.

What are the most important qualities for a relationship manager?

Relationship managers should be bright, presentable and good listeners who are able to understand and be interested in clients, think on their feet and be able to relate the HSBC offering to their clients needs. There’s nothing worse than having someone just spouting a list of products to clients.

We usually separate the role of asset manager and relationship manager except at our boutique HSBC Guyerzeller, which sticks to the traditional Swiss private banking model.

It’s the job of the relationship manager to act as a conduit between the client and HSBC specialists.

Most managers have at least two languages apart from those in onshore locations.

Will private banking form a larger percentage of the group’s revenues in the future?

I would certainly like to think so, but this implies continuing to grow faster than the rest of the group, which is a tall order.

Last year 5.5 per cent of the Group’s profits came from private banking. The annuity income makes private banking revenues good quality and the analysts tend to attribute a higher multiple to this business.

There’s a commitment to the Private Bank at group level - they are keen to continue investment in it.

Are you looking for acquisitions of teams or companies, or can you grow organically?

Our main strategy is to grow the business organically. We are prepared to look at acquisitions but we think that current prices are high.

Teams may be hired in special circumstances but it’s much more difficult to find our shared values in a group which may have many disparate members. We prefer to have individuals who share the HSBC culture.

And clients don’t like their relationship managers to move around too much. We find that when someone moves we hold onto around 80 per cent of the assets. Clients tend to open more accounts but they don’t shut down the initial relationship.

I think this is more of an issue for smaller players whose clients are more attached to one individual rather than teams and a brand.

Is there an asset class that the bank thinks will become more important to private clients over time?

Real estate is becoming a hugely important asset class in spite of it being illiquid and prices being high. People generally feel comfortable with it.

Alternatives are becoming more important to us as these are the asset classes that talented asset managers are attracted to.

Private equity, both direct and indirect is also becoming more important. The internal rate of return that private equity investment has generated over the last five years has been very strong, but you have to ask yourself whether that will continue over the next five.

Which geographical area will see the most wealth management growth in the next five years?

Latin America, Asia and the Middle East are the obvious ones. The US is perhaps the toughest market and tends to have lower growth, but because of its size cannot be ignored.

And we mustn’t forget the strong results from the UK. This has largely been driven by entrepreneurs and the monetisation of their businesses, both newly formed and long established.

In Eastern Europe it’s still early days for us – we don’t have a natural footprint in the region.

In an age in which relationship managers are switching from one bank to another, what can HSBC do to make clients stay with the bank? How can you improve share of wallet?

Overall I think that we have around 50 per cent share of our clients’ wallets but as you go up the wealth ladder this will decline to probably around 20 - 25 per cent. This is very difficult to substantiate though.

The most important part of the offering is the investment asset allocation and this starts with a core multi-manager offering which is very effective. Then we can add more interesting situations depending on the clients appetite for risk and liquidity.

Investment performance is very important to clients, we aim to have our core portfolios perform in line with the market or above, with low volatility. That said, we’re seeing a greater propensity amongst clients to take risks in the current environment.

Does wealth management need a paradigm shift in terms of its offering? For instance, should it be more luxury-focused, or perhaps more investment performance-oriented?

I don’t think there needs to be a paradigm shift. However we are seeing much more emphasis on wealth planning advice, as 80 per cent of the world’s wealth is now onshore.

Relationship managers must be fully aware of the tax implications of their advice and private banks must be able to provide these additional services, either in-house as we do at HSBC in some places, or through external advisors.

Philanthropy too is becoming increasingly important. It’s long been central to the wealth management proposition in the US and now it’s spreading throughout the world.
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