HSBC has its eye on India’s $400bn Wealth

HSBC Holdings Plc, Europe’s largest lender, has set its sights on India in a bid to boost growth and secure its future as the world’s most populous country. The bank has shifted its focus from the Greater China region, where it has been struggling with a downturn in profits, to India, where the wealth held by billionaires has skyrocketed from $148 billion in 2016 to $400 billion. The lender plans to launch an onshore private banking service in India this year and has been scouring for other potential purchases, having already bought an investment business with $10.8 billion in assets under management.

Expanding in India comes with its own set of uncertainties and risks. For example, a recent short-seller report on the conglomerate of billionaire Gautam Adani caused a slump of more than $100 billion in his shares and raised concerns about the collateral required for loans. While Adani has sought to calm investors, the crisis highlights the pressures that banks can face when conducting business in India. However, HSBC, which has been operating in the country for over 160 years, takes a long-term view of the country and its potential, and does not see the current market noise affecting its commitment.

HSBC has sent a steady stream of senior executives to India over the past year, including CEO Noel Quinn and Chairman Mark Tucker. The bank has also seen an uptick in worldwide customers pushing into India and views the country as a huge opportunity for growth. According to the International Monetary Fund, India’s gross domestic product grew 6.8% in 2022, making it one of the world’s fastest-growing major economies.

Despite its growth potential, India still faces structural problems that have the potential to limit its economy over time. Nevertheless, HSBC remains optimistic about India’s future and views it as a long-term runway for growth, much like China in the 1990s. In fact, India is now the largest centre for HSBC by headcount, overtaking the UK, and the bank’s investment bankers made more in India in 2021 than in China.

In conclusion, as multinationals are being forced to make complicated decisions due to the slowdown in the Chinese economy, HSBC is taking a big bet on India and hopes to reap the rewards in the long-term.