HSBC triggers mortgage war in bid to double size and catapult UK earnings to £13bn a year
- Bold strategy also involves investing in state-of-the-art digital technology
- HSBC has 14.5m customers in the UK and took £6.5 billion in revenues last year
HSBC has drawn up plans to double the size of its British bank in an audacious bid to close the gap on the country’s biggest lender Lloyds.
In an interview with The Mail on Sunday today, HSBC’s UK chief executive Ian Stuart says the UK has been identified as a major growth opportunity for HSBC – just as the bank scales back in mainland Europe.
The Scot reveals that the former Midland Bank will invest heavily in mortgages in a move that will intensify a price war in the New Year as it tries to wrestle borrowers away from rivals.
Wooing borrowers: HSBC will invest heavily in mortgages in a move that will intensify a price war in the New Year
The bold strategy also involves investing in state-of-the-art digital technology to impress customers and woo top corporate clients from other big banks.
HSBC has 14.5million customers in the UK and took £6.5 billion in revenues last year. Doubling in size would mean attracting millions of new customers and catapulting revenue to £13 billion a year, putting the bank second only to Lloyds in terms of scale in Britain.
Stuart’s comments will provide some relief in the City amid fears of vast job cuts across the global HSBC empire.
Interim group chief executive Noel Quinn – appointed in August by chairman Mark Tucker after veteran John Flint was ousted – last month indicated that Europe and the US would take the brunt of a rumoured 10,000 job losses.
Stuart says: ‘I’ve got a group chairman who would like us to be double the size we are in the UK.
‘I say, “OK Mark – but there’s a way to get there. It costs money, it costs capital and you’ve got to invest.” I wouldn’t be here unless it was a growth strategy.’
Stuart has committed to ploughing an extra £35 billion into mortgages to boost its market share from 7 per cent to nearer 10 per cent. Lloyds already has a market share of 20 per cent.
He says HSBC is punching well below its weight and has a clear opportunity to grow.
‘For 20 years while I was at rival banks I had been looking at HSBC, and I thought, “If these guys ever get their act together, we’re in trouble,”‘ he says.
HSBC has already invested in technology to make it faster to get a mortgage – it now takes seven days, down from 49 days – and has started selling home loans through brokers.
Three top 20 investors told The Mail on Sunday that it made sense for HSBC to increase its presence in the UK in the hunt for profits.
One said: ‘They could split off the UK bank, but I think what’s interesting is that UK banking is actually pretty profitable. If you look at the returns across the group, and look at the UK bank, that’s the bit you want to keep.’
Last month HSBC, Europe’s biggest bank, said pre-tax profit fell 18 per cent to $4.8 billion (£3.8 billion) in the three months to the end of September, compared to last year.
But Quinn has been broadly positive about the UK since taking over. ‘We are committed to supporting both Hong Kong and the UK through the current challenges they face,’ he has said.