HSBC 2012 Annual Report Download - page 75

73
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Client assets84
2012 2011
US$bn US$bn
At 1 January ...................................... 377 390
Net new money ................................. (7) 13
Value change ..................................... 17 (20)
Exchange and other .......................... 11 (6)
At 31 December ................................ 398 377
• Client assets, which include FuM and cash
deposits, increased by US$21bn, driven by the
inclusion of custody assets in client assets and
favourable market and foreign exchange
movements, partly offset by negative net new
money and the disposal of our operations in
Japan. Negative net new money included a
small number of large client withdrawals and
reflected lower inflows as we became more
selective in establishing new client
relationships, as well as the adoption of more
stringent compliance and tax transparency
standards. We also stopped marketing in
certain non-strategic countries. In addition, we
implemented a redefined segmentation model
to reposition our client base towards higher net
worth international and domestic relationships.
This programme, along with a review of certain
client relationships with a view to reducing
control risk, resulted in a reduction of around
US$4.5bn of client assets in 2012.
• ‘Total client assets’, which also include some
non-financial assets held in client trusts,
increased from US$496bn at 31 December 2011
to US$517bn at 31 December 2012 largely due
to market movements partly offset by negative
net new money as noted above.
• Our return on assets, defined as the percentage
of our revenues to our average client assets,
was unchanged as the reduction in revenues
corresponded with the fall in average client
assets.
Strategic imperatives
• 2012 was a year of transition for GPB as we
repositioned our business model and target
client base to focus investment in selected
priority markets, enhance our compliance and
risk frameworks and encourage better alignment
with the other global businesses. We are
targeting higher net worth international and
domestic customers and have built on existing
product strengths and leveraged Group
capabilities to meet their needs. We expect
this period of transition and implementation
to continue throughout 2013.
Implementing a more focused business model that
better services client needs
• We implemented a new target operating model
based on six ‘global markets’ (North Asia;
South East Asia; North America; Latin America;
Europe; and Middle East, North Africa and
Turkey). This enables us to operate as an
integrated global business rather than a
federation of private banks and to provide our
clients with globally consistent products and
services and improved co-ordination of
marketing and servicing activity.
• We sold or closed a number of non-strategic,
underperforming businesses in order to
rationalise our business and focus on priority
markets. Disposals included our operations in
Japan, our UK property advisory business, a
portfolio of non-strategic clients in Monaco,
our domestic trust business in Malaysia and a
branch of our UK business in Ireland.
• Our compliance and risk framework was
strengthened by the establishment of a GPB
Global Standards Committee and a revised risk
appetite framework. The implementation of
ongoing workstreams including tax transparency
and cross-border marketing will be accelerated
in 2013.
• We enhanced our global front office systems
with the roll out of Global Vision in
Switzerland, Global Client Relationship
Management in the US and Global Private
Wealth Solutions in the Channel Islands, which
provide integrated databases to support effective
client management. We will continue to roll
these systems out to other locations during
2013.
Developing closer collaboration across the Group
• We leveraged existing relationships across the
Group in order to access wealth created by
entrepreneurs who already bank with HSBC
on the business side. Referral flows from other
global businesses generated net new money of
US$5.4bn. To further support referrals with
CMB, a collaboration framework was put in
place, dedicated executives appointed and
referral targets agreed.
• We worked with RBWM to define and promote
a Group-wide wealth offering. GPB and RBWM
now operate a systematic process for the review
and referral of clients to ensure they receive the
service most appropriate to their needs.