HSBC Is Betting Big on India’s $400 Billion Pile of Wealth


(Bloomberg) — “Roaring with national pride. Soaring with global dreams,” blared the HSBC Holdings Plc ad outside an upscale Mumbai suburb in December. The 122-foot billboard displayed a tiger stalking over the British bank’s hexagonal red logo — 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. Shanghai and Hong Kong have been the bank’s centers of gravity since opening its doors more than 150 years ago to fund trade between Europe and Asia. But as a slowing economy and crackdowns on industries from technology to real estate roil the world’s second-largest economy, 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 the South Asian country 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 in an interview in mid-January. 

Expanding in the South Asian country can come with a string of uncertainties. In recent weeks, a short-seller report on the conglomerate of billionaire Gautam Adani has roiled his empire, caused a slump of more than $100 billion in his shares, and raised concerns about the extra collateral he needed for loans. While Adani has sought to calm investors by repaying loans and pledging to reduce debt ratios, 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 via email 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. The Adani Group didn’t respond to a request for comment. 

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. Chief Executive Officer Noel Quinn was pictured signing a book of condolence for the late Queen Elizabeth II at the UK embassy, when he was in the country in September to meet clients.  The bank has seen an uptick among worldwide customers’ pushing into India, and the high-profile visits signal its growing interest in the country,  Rosha said. 

“It is a conscious effort,” he said. “And I certainly think that you will see more of that in the coming years.” 

Quinn’s visit to India saw him call on several of India’s wealthiest businessmen, including Mukesh Ambani and Uday Kotak, according to a person familiar with the visit. Representatives for Ambani declined to comment, and spokespeople for Kotak didn’t respond to a request for comment. 

HSBC’s bet on India — and the hurdles it must surmount to get the investments to pay off — shows the complicated decisions multinationals are being forced to make as the Chinese economic juggernaut slows. Last year, violent protests against virus lockdowns at a Foxconn factory served up a sharp reminder to international businesses like Apple Inc. of the dangers of over reliance on individual markets. 

In 2021, HSBC got about 44% of its total $21.9 billion in adjusted profits from Hong Kong and China while Hong Kong and mainland customers made up more than a third of its total. But China’s problems have struck at the core of the HSBC profit machine in Hong Kong where 2022 half-year profits were down around 30% year-on-year. 

Meanwhile, the International Monetary Fund projects India’s gross domestic product grew 6.8% in 2022, putting it among the world’s fastest growing major economies. “Once people become that wealthy in a domestic economy they start investing abroad,” said Dave. 

The lender is now the largest foreign financial institution operating in India. In 2021, India-based 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.  In January, chairman Tucker, speaking at the Asian Financial Forum conference said Asia’s growth was “not just a story about Hong Kong and mainland China.” 

India was a hugely attractive market, he said. “This could be a basis for a 20 to 30-year runway for growth, as was the case for China in the 1990s.” 

Despite such optimism, analysts say India is riddled with its own structural problems that have the potential to limit the economy over time. Rapid growth can also mean bigger risk as executives and businesses rush to expand.

In recent weeks, a New York-based short seller Hindenburg Research published a detailed report on the Adani empire – alleging the group used a web of firms in tax havens to inflate revenue and stock prices. Adani has denied the allegations, and his group published a 413-page rebuttal.  Stocks in the Adani empire gained some days this week as its founders pre-paid some debt. HSBC wasn’t listed as an Adani financial backer in recent documents released by the group. 

However, the episode demonstrates some of the myriad complexities of doing more business in India. “It’s a hard market to crack, and I have my doubts the economy could grow much faster than now to compensate for China,” said Tom Kirchmaier, professor at the Centre of Economic Performance at the London School of Economics.

Also, despite signs of India’s growing importance, the money it makes there pales compared to what HSBC draws in Hong Kong. Four years ago, HSBC India reached a major milestone as pretax profits broke through $1 billion for the first time in more than a century on the subcontinent. Even so, that’s just 7.5% of the global total. 

That leaves HSBC executives with a tough balancing act politically.  Recent years have been a rollercoaster ride for HSBC and its relations with China. HSBC was criticized by Chinese media outlets for providing information to US authorities in the legal case involving Huawei Technologies’ chief financial officer, forcing the bank to publicly deny that it had “framed” the telecom giant.

HSBC also faced criticism in the West over its stance on Hong Kong’s national security law, after the bank ended up publicly backing the legislation.

India and China, which fought a war in 1962, could fight another one, said Isaac Stone Fish, founder of Strategy Risks, which specializes in corporate relationships with China. “If that happens, banks like HSBC will not want to be caught in the proverbial crossfire.”

“The tensions between India and China over trade, Pakistan, and border disputes requires careful handling for banks that want to maintain large presences or investments in both countries,” he said. 

HSBC also needs to appease its biggest shareholder — China’s Ping An Insurance Group Co., which has been pressuring the lender to consider proposals including spinning off its Asian operations. Ping An declined to comment on HSBC’s expansion outside of China. 

The long-standing legacy of Greater China and particularly Hong Kong, will be hard to shakeoff, said Angela Gallo, senior lecturer in finance at Cass Business School in London.  Yet it’s “a good time to reduce this idea of their main influence coming from China,” she said. “India looks more promising in many aspects and the country is definitely on a trajectory that looks better than China.”

HSBC has begun shrinking or exiting non-core operations in other territories, including its Canadian retail network. It’s expanding in places like Singapore where many of China’s super rich are parking their money. It agreed in 2021 to buy AXA Singapore, an insurance business, for $575 million. But the size of the city state pales compared with India’s more than 1.4 billion people. 

“We certainly have the support to now look at where we could add on and build capabilities,” said Dave. “That would help us to drive through our wealth penetration, our international trade and foreign exchange and other such product lines.” 

HSBC already facilitates around 8% of India’s exports, 10% of foreign direct investment and 10% of local currency trading. Back in 1987 HSBC even installed India’s first ATM.

It still faces international competitors like Standard Chartered Plc there. Also, established major banks like Kotak Mahindra Bank, and public sector institutions like State Bank of India still have an effective lock on much of India’s domestic banking business. 

“From an overall share of the market, global banks are middle of the pack in India, with leadership positions in a few areas,” said Saurabh Trehan, partner in Bain & Company’s financial services practice.

Dave said he was confident HSBC could still get ahead in the South Asian country, partly because of its global heft. There are customers in India who want to send their kids abroad, and businesses that want to make acquisitions overseas. 

“There is a certain segment of the market that we can serve better than the local banks,” he said. 


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