HSBC Germany targets leading mid-cap companies
The streamlined HSBC Germany now has a strong focus on serving internationally oriented corporates, including connecting European clients to opportunities across HSBC’s international network.
That is why the German unit, part of HSBC Continental Europe, is happy to observe the ongoing consolidation in the European banking sector from the sidelines. „I cannot imagine any scenario in which an acquisition would really help us,“ HSBC Germany CEO Michael Schleef told Börsen-Zeitung. „We have a crystal-clear setup and a clear objective. An acquisition would only distract us from this path."
„Our goal in Germany is market leadership in Corporate and Institutional Banking (CIB) with internationally oriented clients,“ said Schleef. That may sound like reaching for the stars, but it needs to be put into perspective. HSBC’s German subsidiary is not aiming at the entire market: „Our target client base in Germany consists of about 900 companies – in that segment, we have a penetration rate of 80 to 85%," he explained.“
Clearly, once you already serve most clients in a market, it becomes increasingly difficult to win new ones. Schleef, however, sees this as motivation. Since the German unit set a clear new course in 2021, growth in its core business has been unfolding rapidly. „In corporate banking for German clients, we have grown by around 60% since 2021. Business with foreign clients in Germany has nearly tripled over the same period. In the Financial Institutions segment, we have grown by about 15% over the past four years,“ Schleef recounts with pride.
Germany growing in importance within HSBC
According to Schleef, HSBC Germany now ranks fifth in the group’s internal CIB ranking. The only countries ahead are China, the UK, the U.S., and France. Moreover, the goal of market leadership in the German market is within reach. „When it comes to supporting our clients towards Asia and the Middle East, we are already number one. Towards North America, we are in a neck-and-neck race with a competitor in the mid-market segment,“ said the banker, who built his career in Germany’s SME business. Schleef, however, does not wish to speak about rivals, even though it is likely that the reference is to Germany’s domestic champion, Deutsche Bank.
In our trade finance business, HSBC’s involvement with clients has always been deepest when the environment was most challenging.
Schleef does not deny that times have become challenging in corporate banking, given geopolitical risks and US tariffs policy. But he notes that „in our trade finance business, HSBC’s involvement with clients has always been deepest when the environment was most difficult.“ Of course, every company must consider how to deal with the US’s new trade policy course. Yet the situation differs individually: some firms, for example, benefit from Chinese competitors facing higher tariffs in the U.S.; others consider how best to pass on the tariffs; and still others take them as an opportunity to invest in the US.
So far, HSBC Germany has not observed a decline in trade finance volumes. „In supporting German clients abroad, we have grown by 6% so far this year. Excluding the interest rate effect, that’s 16%,“ said the bank chief. This is because most of the business lies in regions of the world that are growing very quickly. „Our international network is particularly advantageous right now, as we are not only proficient in trade finance but can also help clients with their investments,“ Schleef emphasized.
Change always brings turbulence.
Yet although the former Deutsche Bank executive insists that the strategy is sound, and that HSBC Germany has a prosperous path ahead, the mood inside the bank is unlikely to be rosy everywhere after the sale of several business units. „Change always brings turbulence,“ the bank chief admits. „But transparency helps – just as our diligence in the search for buyers has.“
Within the past year, HSBC has found buyers for its German private banking business, the German custody business, and the German fund administrator Inka. What will happen with HSBC Transaction Services GmbH (HTNG) and its 400 employees remains open. A „strategic options review“ is still underway. The units sold off are essentially German-specific exceptions for which there is no longer a place in the global HSBC Group.
Staff reductions
In total, headcount is being reduced by around 30%. „We currently have 2,300 employees. Taking into account the three planned sales and already announced structural adjustments, headcount will fall to 1,600", Schleef explains. In contrast, revenues after the divestments are declining by only 15%. „At the same time, we are growing in CIB,“ Schleef emphasises.
