For HSBC, the Canadian private wealth management market is a major opportunity. The global bank is looking to double the size of its Canadian private client business in the years to come. Robin Arnfield speaks to Nader Guirguis, CEO of HSBC Private Wealth Services (Canada), for further details.
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A gold standard reputation, socioeconomic stability and liberal immigration policy have led to a significant amount of international wealth making its way into Canada. The country is also experiencing a boom in its domestic wealthy numbers, giving private banks ample opportunities to prosper.
The estimated 137,460 high net worth (HNW) Canadians with assets of at least US$1m in 2016 are expected to grow to 171,150 by 2020, according to GlobalData. The estimates are based on liquid wealth – cash deposits, bonds, equities, and mutual funds – held onshore in Canada.
The HNW segment is also expected see its assets grow from US$490.19bn in 2016 to US$613.06bn in 2020.
Understandably global banks find Canada an attractive private banking hub.
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By GlobalDataFor HSBC, Canada is “one of the jewels in the crown” globally, according to Nader Guirguis, CEO of HSBC Private Wealth Services (Canada). “The country is attractive to us, as it’s a low-risk environment with a stable economy that is attracting wealth and quality immigrants from around the world.”
Guirguis has over 25 years experience in the Canadian banking industry in the areas of commercial banking, retail banking, wealth management and private banking. In his current role, he leads HSBC’s HNW/UNHW investment counsellors and wealth planners. Over the last year, HSBC has expanded its investments in its Canadian retail banking and especially its wealth management businesses, says Guirguis.
“There is huge interest in growing our Canadian franchise in wealth and private banking by using HSBC’s global expertise to serve our Canadian clients. We are leveraging the fact that we are the largest foreign-owned bank in Canada and the fact that we have a global network of wealth management analysts,” he says.
Since 1981, HSBC Canada has expanded by acquiring financial institutions such as Lloyds Bank Canada; an asset management firm; a trust company; Republic National Bank of New York (Canada); and Barclays Bank Canada. In 2012, HSBC sold its Canadian full-service retail brokerage business to National Bank of Canada, but retains the HSBC InvestDirect Canadian online brokerage.
As at 31 March 2017, HSBC Global Asset Management globally held assets under management of US$427.9bn. In Canada, HSBC held C$16.36bn ($12.35 bn) in AUM, according to the bank
HSBC Canada says that, in its first quarter to 31 March 2017, its retail banking and wealth management businesses “benefited from growth in AuM”.
“Cost-saving initiatives and lower loan impairment charges drove a 110% increase in profit before tax,” Sandra Stuart, HSBC Bank Canada’s President and CEO, said in a statement.
Guirguis says: “HSBC Canada is investing heavily to double its private client base in the next three to four years, and double the size of our Canadian private banking business.”
Private client thresholds
To qualify for HSBC Canada private client status, HNWIs and UHNWIs need minimum investable assets of C$1m ($753,900). HSBC Canada offers Premier Banking services to customers with total relationship balance of at least C$100,000 ($75,390).
“Over 75% of our private clients in Canada are current or retired business owners,” Guirguis says. “The rest are professionals and senior executives of large corporations. Our commercial banking clients are the main conduit for our private client base, and we make sure our clients’ transition between our commercial banking and private client businesses is seamless.”
While including clients from Canada’s resource-based industries such as oil, gas and mining, HSBC Canada’s private banking customer base is diversified across all industry sectors. “Of course, there are regional variations, for example in the oil-rich provinces such as Alberta where there are a lot of clients in oil and gas,” Guirguis says.
HSBC services private clients right across Canada, but has four main dedicated private wealth management hubs – located in Vancouver, Calgary, Toronto and Montreal. “The vast majority of our private clients are located around these hubs,” says Guirguis. “We service all the surrounding regions from these hubs, and we will be opening more dedicated HNW offices. In addition, our private client relationship managers (RM) meet with clients in many of our branches across Canada. We go to the client, rather than the client come to us.”
HSBC Canada recently launched Jade by HSBC Premier, an invitation-only lifestyle and banking offering for the HNW space.
“Jade comprises a dedicated team of experts who cater for HNW clients plus dedicated products and services for this segment. We will be opening Jade centres in Montreal, Calgary, Toronto, and three in Vancouver,” says Guirguis.
Tripod Model
HSBC serves private clients in Canada through what it calls the Tripod model. Each private client has a RM who offers the full suite of products and services such as bank accounts, cash management, and more complex lending products.
The RM is supported by an investment counsellor who specialises in providing discretionary investment services along with estate planning and business succession planning, and a wealth planner who makes recommendations to the client. “The wealth planner’s suggestions are fulfilled by the investment counsellor or the RM,” says Guirguis.
Underlying this model, clients have a dedicated portfolio manager at HSBC Global Asset Management (Canada) that handles the day-to-day running of their investments.
“We’re growing equally in the four main hubs where we service our clients,” says Guirguis.
Canada’s largest cities are experiencing significant real-estate market growth, due to Canada’s low-interest rate environment. “We help our clients with their real-estate investments, for example through mortgage products. We’re seeing many clients diversity their holdings into real estate in Montreal, Vancouver or Toronto,” says Guirguis.
Global reach
HSBC differentiates itself from other Canadian banks using its global investment management and wealth management expertise to service Canadian clients, according to Guirguis. “We have HSBC global asset management offices in over 30 countries, and our analysts across the globe are geographically close to the companies in which we invest our clients’ funds. We do our own research, and have our own direct connections to the management of these companies.”
HSBC Premier and HSBC private banking clients enjoy linked HSBC bank accounts across the world, enabling them to move money in real-time between their HSBC accounts in different countries.
Alongside Canadian clients, HSBC Canada attracts international customers, who may either be new immigrants to Canada or want to invest in Canada.
“HSBC Canada is a natural conduit for international clients who want to diversify their international investments into the Canadian market or establish a foothold here. We regularly get referrals from other HSBC subsidiaries when their clients are immigrating to Canada or want to invest here.
“We also cater for the Canadian family office market, and we’re seeing family offices coming to us to leverage our global investment management expertise,” says Guirguis.
