HSBC Brazil: Global Strategy and Strategy of HSBC Brazil

Interview with Helio Ribeiro Duarte, Executive Director of HSBC Brazil

As the Chief Institutional Relations Officer of HSBC, what is the goal of your presence in such an event as this one from LIDE (Group of business leaders)?

HSBC Brazil has been a LIDE associate for over 10 years. Since the very beginning our goal has always been to promote business relations. The LIDE’s lunches and activities help us to get to know our customers and also to attract new ones.

Since when is HSBC present in Brazil, and what is its strength here?

It was an old dream for the HSBC Group to take part in the Brazilian banking services market and, in 1997, there was an opportunity of doing so. At that time, the Brazilian Central Bank intervened in the bank Bamerindus, which was a local capital enterprise, and HSBC took over the banks´ franchise and customers.

After 15 years, the Brazilian operation is still growing. The company’s headquarters in London is very happy with the performance of the bank here and in 2010, HSBC Brazil was the fourth most profitable operation of the Group. Our global CEO visited us twice last year and acknowledged the importance of the country to the HSBC’s global strategy.

Since May last year the Group has been globally reviewing our businesses based upon five strategic filters and undoubtedly Brazil is and will remain a key priority for investment and trade. A good example is that, this year, the cover page of our Global Annual Report will be a Chinese ship at the port of Santos, illustrating the trading connection between Brazil and China and our importance to the HSBC Group as an emerging market.

Brazil is a country with a large population, a lot of young people, with very powerful demographics, which is reaping the benefit of 20 years of consistent economic policy, applied by different presidents, from different political parties. It also has fantastic natural resources and there is a tremendous flow of people into the A and B socio-economic classes, which is a great opportunity for wealth management. Besides, there is a strong opportunity for finance infrastructure as well.

Which are your future strategies and what is the type of market you want to reach?

HSBC has a clearly articulated global strategy for becoming the world’s leading international bank. We do not want to try to be all things in all markets. Our strategy is based on two fundamental elements: international connectivity and mid-to-long term global economic development and growth patterns. Thus, all regions, countries and business are being analyzed in order to drive growth in priority areas where scale and profits can be achieved.

It is well spread that some of the fastest wealth creation is happening in emerging markets such as Asia and Latin America. Our strategy therefore is to focus on the world’s faster growing countries like India, Brazil and China. HSBC realized long time ago that the European economies and even the American one were very stagnant. So the Group started to look for organic growth and prefer emerging countries where we can achieve relevant scale and can service customers with international needs. Additionally, we are moving from an approach that was product oriented to a more customer centric strategy.

Based on this, we are beginning by capturing social mobility and wealth creation. For example, in Brazil, around 40 million people have become middle class in a relatively short period of time and they didn’t have a bank account before. So, there surely is a huge opportunity for growing there.

Our focus is on the mass affluent customer segment which has international banking needs to provide them wealth management proposition as a key differentiation item. HSBC has good competitive advantages such as strong financial balance and brand strength, seamless customer experience across different distribution channels and global Premier and Advance propositions. So, our strategic goal is to drive a sustainable improvement across these businesses by developing world class wealth management for retail customers, leveraging global expertise in retail banking and portfolio management to bring attractive returns.

However, our main competitive advantages in Brazil are in the wholesale sector and not in the mass retail area. Due to the difficulty to compete with the big local banks in Brazil and aligned to the global strategy, HSBC Brazil has then privileged high income customers.

Certainly, few banks possess an international network and none such one as we do. We can offer an operations desk and assist Brazilian companies to make acquisitions overseas or to access the dollar bond market, as well as the local bond market, just to mention a few services.

We also have a successful commercial banking and, specifically in this area, our strategic goal is to become the leading commercial bank for international businesses, by developing unique offerings. In other words, to be the bank of choice for international business, increasing the number of internationally oriented mid-size companies in Brazil.

Part of our strategy is exactly to closely relate with China, which has become the most important Brazilian commercial partner in terms of imports and exports.

Which is HSBC’s strategy in terms of development in the next two years, in general terms, as well as in terms of all the investors that want to come to Brazil?

Our bank has a clear strategy defined for the next two years. We want to grow in terms of assets with a growth in the volume of loans we grant in the local market. We are focusing on delivery of high-value added products to our core corporate customers and foster cross-selling between segments, products and geographies. We provide a strong brand position, a global footprint as well as our resilient and sustainable franchise that’s well integrated into the HSBC network to support our global customers in Latin America.

Foreign investments continue to be made in Brazil. It’s seen as a country of opportunity. It has been able to remain relatively unharmed during the current crisis, due to its strong domestic market, and the new layer of population being added to the consumer’s market is a motor for economic development.

Due to all that, many companies have been coming to Brazil to build factories like, for example, in the automotive sector: we have companies from France, Japan, Korea, etc.

So, to finalize I’d like to emphasize that Brazil, China and India are countries with major investment opportunities and, here in HSBC, we are certainly opened for business.