HSBC bets on India’s $400 bn wealth, to set up onshore banking

MUMBAI: “Roaring with national pride. Soaring with global dreams,” blared the HSBC Holdings Plc ad outside an upscale Mumbai suburb in December. The display was a not-too-subtle signal of its ambitions to dominate the financial industry of what’s by some estimates now the world’s most populous country.

Those expansion plans are vital to shore up growth at Europe’s largest lender, which is grappling with a downturn in profits from the Greater China region. HSBC is looking further afield to India — despite risks there as well.

The bank is planting its sights more firmly on the ultra-rich in India, where the wealth held by billionaires has crossed $400 billion from $148 billion in 2016. It also plans to launch an onshore private banking service in India this year. After buying an investment business with $10.8 billion in assets under management there, it’s scouring for other selective purchases. “We certainly are always looking for bolt ons that would help us drive our capabilities further,” Surendra Rosha, co-head of Asia-Pacific at HSBC said mid-January.

Expanding in the country can come with a string of uncertainties. In recent weeks, a shortseller report on the conglomerate of billionaire Gautam Adani has roiled his empire. The crisis has highlighted the pressures banks can face when doing business in India. “HSBC has been in India for over 160 years, and takes a very long term view of the country and its potential. There have been many upheavals over these years, and just as past episodes didn’t alter HSBC’s stance and commitment, nor will the current market noise,”

Hitendra Dave, who runs HSBC India, said this week. HSBC declined to comment on Adani. The lender — which is focused on green energy transition — didn’t have a banking relationship with the entrepreneur given his ongoing exposure to the coal industry, people familiar with the matter said.

A steady stream of senior HSBC executives have flown in to India over the past year. Chairman Mark Tucker met the head of India’s G20 preparation committee in December.

The lender is now the largest foreign financial institution operating in India. In 2021, Indiabased employee numbers overtook those in the UK to become the bank’s largest center by headcount. HSBC’s investment bankers made more in India that year than in China, and commercial banking profits are not far behind those of the lender’s mainland Chinese unit.