Connect with us

Hi, what are you looking for?

Alive Business PlanAlive Business Plan

Investing

HSBC, Barclays and StanChart jostle for US banking riches, unruffled by White House race

By Lawrence White and Sinead Cruise

LONDON (Reuters) – Britain’s big global lenders HSBC, Barclays and Standard Chartered (OTC:SCBFF) are vying to tap into a boom in U.S. commercial banking as corporate America seeks expertise for international expansion plans.

At stake is a growing pool of U.S. commercial banking revenues, which reached $429 billion in 2023 from $310 billion in 2019, helped by a strong U.S. economy and a boost to margins from higher interest rates, previously unreported data from consulting firm BCG showed.

European banks collectively share less than 7% of those revenues, but see good growth opportunities regardless of who wins the election on Nov. 5, driven by global trade flows.

“The East-West trade is really important for HSBC because of our very strong presence in Asia … but actually for the UK, the main corridor in terms of business volumes is transatlantic,” Stuart Tait, HSBC UK’s head of commercial banking, told Reuters.

In the year to June 30, the value of payments made by HSBC UK’s business clients to the U.S. rose by 15%, while transactions in the other direction rose by 5%, Tait said.

Rising merger and acquisition activity on either side of the Atlantic is one factor driving business. U.S. companies like the UK tech and R&D sectors in particular and UK valuations look relatively cheap, Tait said.

In the first six months of 2024, U.S. firms on HSBC’s books acquiring UK businesses or creating new subsidiaries in the UK rose by 71% year on year, while UK-based clients doing the same in the reverse direction increased by 45%, HSBC data showed.

“Banks like HSBC can focus on ‘trade corridors’ with the U.S. for commercial banking clients and gain share,” Amit Sukhija, a senior manager at BCG, said.

The push to expand in the U.S. comes after British banks such as HSBC scaled back in Europe in recent years, amid struggles to persuade domestic corporate clients in markets such as France and Germany to buy more of their services.

There have been challenges in HSBC and Standard Chartered’s core Asian market too, with both lenders having incurred losses in China amid a crisis in the Chinese real estate market.

NEW ERA

The boom in U.S. business marks a more positive era after the British banks’ chequered recent past, including HSBC’s disastrous push into subprime mortgages just prior to the 2008 crisis.

HSBC and StanChart have also between them paid over $3 billion in U.S. fines over failings in anti-money laundering controls since 2012, while Barclays in 2022 agreed to a $361 million penalty over mis-selling of securities in the U.S.

The problems prompted the banks to prioritise corporate business over retail banking in the U.S.

Executives in London are coy on whether presidential candidates Republican Donald Trump or Democrat Kamala Harris would be better for their prospects.

“The question on policy will not just be decided by the presidential election, but what happens in the house, and what kinds of officials are put in, who can get confirmed, and you really won’t know all of this until into the first quarter,” Barclays CEO C.S. Venkatakrishnan told Reuters on a media call.

Barclays made 31% of its revenue in the U.S. in 2023 versus 25% in 2022 as its heavily U.S.-based trading business performed strongly and it grew revenue from its growing credit cards business.

The bank’s third quarter results last week showed the increasing importance of the U.S. to Barclays.

It reported a 8.4% return on average allocated tangible equity, a measure of profitability, at its U.S. consumer banking division in the nine months to end-September, up from 5.7% a year earlier.

Barclays is hiring more sector experts to help win business from rivals, executives at the bank said last month.

It has also doubled U.S. dollar deposits at its New York branch in 2023 and again in the eight months to August this year, as it brings on board more corporate customers, its co-heads of investment banking said in the presentation to investors.

Emerging markets focused-Standard Chartered is leaning on its ties in its historical roots in Asia, Africa and the Middle East, to serve big U.S. corporates expanding in those regions.

Chief Financial Officer Diego De Giorgi told Reuters the bank also wants to grow its presence among U.S. financial firms as StanChart tries to hit a target disclosed on Oct. 30 of 60% of investment bank income from the sector, up from 49% in 2023.

“Many of our strong relationships… are in Europe and the United States, and we will continue to invest there with financial institution clients,” he said.

This post appeared first on investing.com
Become a VIP member by signing up for our newsletter. Enjoy exclusive content, early access to sales, and special offers just for you! As a VIP, you'll receive personalized updates, loyalty rewards, and invitations to private events. Elevate your experience and join our exclusive community today!

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    You May Also Like

    Latest News

    The Gateway Pundit, a far-right website, published a note from its editor on Saturday acknowledging that two election workers in Georgia did not engage...

    Latest News

    New majorities in Congress, particularly when the incoming party has a new leader, offer the rare chance for the institution to take a breath...

    Investing

    JAKARTA (Reuters) -Indonesia has asked Alphabet (NASDAQ:GOOGL)’s Google and Apple (NASDAQ:AAPL) to block Chinese fast fashion e-commerce firm Temu in their application stores in...

    Latest News

    Sister Stephanie Schmidt had a hunch about what her fellow nuns would discuss over dinner at their Erie, Pennsylvania, monastery on Wednesday night. The...



    Disclaimer: alivebusinessplan.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 alivebusinessplan.com