{"text":[[{"start":9.55,"text":"When Thomas Jackson worked as chief manager of the Hongkong and Shanghai Banking Corporation in the British territory in 1899, he and the institution were so integral to the region that a letter addressed simply to “T.J., China” was duly delivered to him."}],[{"start":27.3,"text":"In the century that followed, HSBC leveraged this dominance of a remote outpost of Britain’s empire to expand across the world. Acquisitions in the Middle East, the Americas and Europe helped make it one of the world’s largest banks by assets."}],[{"start":43.15,"text":"But over the past five years, outbound investment into new markets and businesses has been thrown into reverse. The company that until recently marketed itself as “the world’s local bank” is now firmly staking its future on Chinese wealth flowing out of the country, rather than western capital flowing in."}],[{"start":60.8,"text":"HSBC, comfortably Europe’s largest bank by market capitalisation, “is now a bet on China outbound”, principally from its base in Hong Kong, says a former senior executive at the bank. Its presence in China itself is much smaller, while the UK, its other major profit centre, is a much slower-growing market."}],[{"start":81.15,"text":"“[Chinese wealth] is a once-in-a-lifetime structural growth opportunity . . . We are best placed to capitalise on that,” says another senior HSBC banker. Executives at the bank believe there are 73mn people in the country who could potentially be interested in offshore wealth services — a number that has more than doubled since 2022, according to internal presentations. "}],[{"start":104.60000000000001,"text":"Capturing a bigger slice of that could generate fee income that tends to grow with assets under management, is less vulnerable to interest rate movements and also does not require much regulatory capital."}],[{"start":null,"text":"

"}],[{"start":116.9,"text":"But the strategy comes with risks. A slowdown in China’s economy could affect its rate of wealth creation, while managing assets from Chinese offshore leaves HSBC exposed to crackdowns by Beijing — such as the “common prosperity” campaign against capitalist excess that started in 2021, or more recent investigations into historical foreign capital gains. "}],[{"start":139.20000000000002,"text":"There is also the long-held fear that China’s leaders may try to assert more influence over the bank, either through regulation or by acquiring shares. Some suspect Beijing may have tacitly supported an attempt by Chinese insurer Ping An in 2022 to force the bank to spin off its Asian entity into a separate business — though HSBC has said it saw no evidence of this and Ping An has always declined to comment."}],[{"start":168.3,"text":"Even so, Georges Elhedery, appointed chief executive two years ago, has accelerated the rush to the east. He has largely withdrawn HSBC from helping companies raise equity and providing M&A advice in many markets, split the bank’s operations into eastern and western spheres, and spent over $13bn acquiring full control of Hong Kong-based Hang Seng Bank. "}],[{"start":192.45000000000002,"text":"“Increasing exposure to Hong Kong and capturing growth from wealthy Chinese clients has worked reasonably well,” says one top-20 shareholder in HSBC. “On the other hand, clearly, this has also come under [Chinese] government scrutiny.” "}],[{"start":207.75000000000003,"text":"HSBC’s co-CEO for Asia, Surendra Rosha, said in a statement that the bank is “delivering focused, sustainable growth across our four businesses in line with our strategy”. Hong Kong, he added, “is far from the only opportunity we see. We are investing to capture structural wealth growth and connect Asia to the world for our clients.”"}],[{"start":229.00000000000003,"text":"Unassailable in Hong Kong"}],[{"start":231.65000000000003,"text":"Even before Elhedery’s latest pivot to Asia, Hong Kong was HSBC’s biggest source of both revenues and profits. According to an FT analysis of first-half results, the territory plus China accounted for almost half of group pre-tax profit. "}],[{"start":249.60000000000002,"text":"The Hong Kong business unit also generates the highest returns, as measured by return on tangible equity, at an annualised 44 per cent in the first half. That is more than double the 21 per cent recorded in the UK."}],[{"start":264.45000000000005,"text":"Comparisons with previous eras can be challenging due to frequent restructurings, but Hong Kong and China combined accounted for 40 per cent of HSBC’s total revenues in 2025."}],[{"start":null,"text":""}],[{"start":277.20000000000005,"text":"Asia accounts for almost 70 per cent of HSBC’s global wealth balances with $1.1tn managed in the region, while almost $9 in every $10 of new inflows in that business during the first half of 2026 came from Asia. "}],[{"start":293.75000000000006,"text":"China-related business also accounts for a significant portion of the bank’s corporate and institutional banking arm. Hong Kong is the only place where HSBC has maintained a competitive equity capital markets division, and bankers say that bringing companies to market there generates windfalls for founders that represent another wealth management opportunity."}],[{"start":315.3500000000001,"text":"Hong Kong overtook Switzerland last year as the world’s largest cross-border wealth hub, according to the Boston Consulting Group, with $2.9tn of non-local assets."}],[{"start":326.55000000000007,"text":"In retail banking, HSBC reinforced its longstanding dominance of the Hong Kong market earlier this year by acquiring the 36 per cent of Hang Seng Bank that it did not already own, allowing it to upsell premium and wealth services to Hang Seng’s 3.3mn customers."}],[{"start":344.00000000000006,"text":"Alex Potter, global financials analyst at shareholder Aberdeen Investments, says the deal was on the expensive side but adds that “increasing your profit contribution from Asia, when it is growing incredibly fast, is a brilliant thing to have done”."}],[{"start":null,"text":""}],[{"start":358.75000000000006,"text":"One of the largest components of HSBC’s wealth-related income in 2025 was insurance, driven by Chinese visitors to Hong Kong. Many mainland Chinese buy non-renminbi insurance policies in person, allowing them to legally diversify their currency exposure and place assets beyond China’s capital controls. "}],[{"start":378.95000000000005,"text":"Such policies tend to pay out an annuity-like income and their holders will often open HSBC bank accounts to pay premiums or receive dividends. There are 7.3mn HSBC and Hang Seng accounts in a city of 7.52mn people and HSBC is on track to add more than 1mn new customers in Hong Kong for the second year running, according to its investor presentations. "}],[{"start":403.50000000000006,"text":"“A lot of new customers in HSBC Hong Kong are non-residents,” says Kathy Chan at Morningstar, the investment research firm. “[Although] they do not disclose where the non-residents are from, we do believe HSBC is benefiting from the China wealth flow.”"}],[{"start":418.15000000000003,"text":"Insurance purchases hit an all-time high in the first half of 2025, the last available figures before the territory’s Insurance Authority stopped disclosing the proportion bought by mainland visitors, in a sign of the sensitivity of the metric."}],[{"start":432.40000000000003,"text":"The bank’s hiring also indicates an institution pivoting to China. Although a snapshot of current vacancies may not provide an accurate picture of hiring across a full year, an FT analysis of current job openings at the group shows almost half of vacancies are in Hong Kong and China, with 29 per cent in the mainland. "}],[{"start":451.25000000000006,"text":"This build-out has its challenges, particularly for the group’s focus on scaling up in China. “Getting good relationship managers in [mainland China] . . . is not a given,” says one senior HSBC banker."}],[{"start":null,"text":""}],[{"start":463.6000000000001,"text":"Benefits and perks for senior HSBC employees in Hong Kong are increasingly aligned with those of Hang Seng bankers, who are mostly recruited locally. An institution that once dispatched cohorts of “international officers” from the UK to occupy key roles abroad has recently cut back on perks such as private school fees and club memberships for expatriate staff."}],[{"start":486.55000000000007,"text":"“All senior [local] roles have to be Mandarin speakers in Hong Kong and China,” adds one person familiar with the bank’s hiring in China. "}],[{"start":495.6500000000001,"text":"The contrast with HSBC’s UK business, its other single big profit centre, is striking. Just 3.3 per cent of open jobs are in the UK. Revenue growth in the UK is slower, while profit growth in recent quarters has been driven mostly by a widening spread between what the bank pays depositors and what it receives from borrowers or investments, rather than fee income."}],[{"start":520.6000000000001,"text":"Exposed to risks"}],[{"start":523.2000000000002,"text":"HSBC may have a dominant position in Hong Kong, but it is yet to translate into a commanding market share in mainland China, despite heavy investment in the country."}],[{"start":534.0500000000002,"text":"The bank acquired Citigroup’s retail wealth management portfolio in China in 2024, adding approximately $3.6bn in deposits and assets and giving it an established client base of affluent customers across almost a dozen cities. "}],[{"start":549.9500000000002,"text":"“HSBC’s ambition is to be the leading international wealth manager for mass affluent and high-net-worth individuals in mainland China,” Nuno Matos, who was then head of wealth and personal banking, declared at the time. "}],[{"start":563.5000000000001,"text":"But it is a long way from achieving that goal. HSBC booked more than $200mn of profit from wealth management in China in the first half — a significant increase from just $8mn in the same period last year, but still small in relative terms. The city-state of Singapore made the bank $346mn on the same measure in the same period. "}],[{"start":null,"text":""}],[{"start":587.4500000000002,"text":"HSBC boasts a strong position among foreign banks in the mainland market and is one of a few to wholly own its onshore insurance business. But the big four state-owned banks still dominate the market. "}],[{"start":600.5500000000002,"text":"“They are not competitive in the domestic Chinese market,” says one former HSBC executive in Hong Kong. “HSBC doesn’t have retail distribution, a branch network or brand awareness [in mainland China].”"}],[{"start":613.6500000000002,"text":"Elhedery has since expanded the network of so-called wealth centres, where advisers can court affluent clients, across Beijing, Chengdu, Hangzhou, Ningbo, Shanghai, Shenzhen and Wuxi. HSBC executives also gathered this summer in Nansha, a ferry ride from Hong Kong, where the bank has established a training centre for over 14,000 employees."}],[{"start":636.7000000000002,"text":"Matt Choi, analyst at Fitch Ratings, says the bank is playing to its strengths. “In onshore China, investment mainly went into wealth management in previous years, but demand has been stronger for cross-border flows,” he says, “[The] Hong Kong business has been the key beneficiary.”"}],[{"start":654.1500000000002,"text":"Meanwhile, HSBC’s growing emphasis on Chinese wealth moving abroad inevitably exposes the bank to more policy risk from Beijing. "}],[{"start":663.0000000000002,"text":"Over the summer, its share price whipsawed after the FT reported a fresh tax crackdown on insurance and offshore trusts, the latest in a series of measures to prevent wealth leaving the country."}],[{"start":675.0000000000002,"text":"China has moved more broadly to regulate outbound investment flows and close loopholes used by wealthy individuals to shelter overseas assets from tax liabilities, spurred by the need to raise tax revenues and a desire to limit capital flight, according to analysts at Barclays."}],[{"start":690.7500000000002,"text":"As a bank created to facilitate trade between east and west, HSBC has long had to navigate geopolitics along with the varying regulatory hurdles of different markets."}],[{"start":700.9000000000002,"text":"The FT spoke to one member of a wealthy Chinese family and HSBC premier client, who praises the bank’s global transaction network and ease of use but bridles at what he regards as an intrusive onboarding process. “Are they making opening accounts easier for Chinese people?” he asks."}],[{"start":null,"text":""}],[{"start":718.2500000000002,"text":"But the geopolitics can be extremely delicate. In 2021, HSBC found itself caught in the tussle between US authorities seeking the extradition of Meng Wanzhou, the chief financial officer of telecoms equipment group Huawei, and a Chinese government seeking to protect a national champion. "}],[{"start":737.6500000000002,"text":"After the bank handed over records related to the case to US prosecutors, Beijing threatened to add HSBC to its “unreliable entity list” while Huawei took it to court in the UK."}],[{"start":748.7500000000002,"text":"Some fear that HSBC’s continued shift towards Asia could give Chinese partners, regulators or policymakers more leverage. Ping An’s attempt to split the bank up was fended off at the time by Noel Quinn and Sir Mark Tucker, then chief executive and chair. "}],[{"start":762.1500000000002,"text":"Neither is still at the bank, and not everyone is convinced the current senior leadership team has the depth of experience needed to navigate its increasingly consequential relations with Beijing. "}],[{"start":772.4000000000002,"text":"During its search for a new chair, HSBC struggled to find executives with sufficient Asia and China experience. It considered former UK chancellor George Osborne and Kevin Sneader, president of Asia ex-Japan at Goldman Sachs, but ended up appointing Brendan Nelson, a well-regarded former KPMG executive who has had little direct involvement with China."}],[{"start":794.6500000000002,"text":"It said at the time that Nelson had demonstrated “excellent leadership capabilities backed by strong banking and governance credentials”. But one former executive still questions whether the bank has “the right people in the right roles to deal with the geopolitical situation they are in now”."}],[{"start":810.5000000000002,"text":"Additional reporting by Emma Dunkley in London. Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":824.7500000000002,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790776256_5158.mp3"}