Michael Roberts, HSBC US CEO, says the company's in-person attendance has doubled to 80% in it's New York office since they moved, helping the firm establish more of a footprint in the US. Roberts spoke with Bloomberg's Manus Cranny.
Bloomberg Audio Studios, Podcasts, radio News. Michael Roberts, good to see you this morning.
Thank you for welcoming us onto your new trading floor, your new building done in Hudson Yards.
This is in many ways a statement.
If I look at the bank and the organization, you spent a number of years deconstructing HSBC in the US selling assets on the East and West coast. Is that deconstruction done and you are fit for purpose today?
Yeah?
Thank you manas for being here and answer the question is definitely yes. We had a transformation plan that we started in twenty twenty, unfortunately right as COVID had, but we persevered, we got through it, and we really took the bank down to its core and rebuilt it in an image that we think is going to be much more successful. Focusing on our international core capabilities. We are in the main international bank, focusing on trade, focusing on entrepreneurs. Before that we were a little more scattered were focus.
We weren't this discipline.
Now we are in both in our wholesale businesses and our retail businesses. We focus on serving international clients and doing so what we think is a very unique way.
So it is done. We're very happy about that.
This building is in fact the last piece of the puzzle. It's the culmination of all the efforts.
If I said to you, then where's the concentration going to be? Is it going to be built up? Commercial banking here in North America serves into Asia and China, complementary with wealth management is a double tall.
Yeah, it is definitely that.
So we are unique in that we certainly serve wholesale clients on an international basis.
So think of.
American clients and they maybe small clients up to the largest, the largest multinationals. We serve them into Asia, into Middle East.
And into Europe. That works quite successfully.
Similarly, we serve those foreign clients operating in the United States, and think about a European company or an Asian company. The US is the biggest market in the world. They want to be here, they have to be here for their own strategies, and so we can give them that platform as well. What really makes us unique, however, is our business and retail and wealth management. It is extraordinary because we can serve international affluent wealth management type of clients in a way that.
No other bank can. So think of your sitting in Hong Kong.
You want to buy property in the United States, maybe your son goes to a university the United States.
We can provide the mortgage. We can provide you a credit card.
Ever trying to get a credit card without a fight co score in the United States.
I have tried that.
But let's just pick up on that because of course you bought SVB in the UK, and then you picked up forty bankers from SVB, you know, in the wreckage of that time over a year ago. Do you want to build and buy more wealth management? How do you build a wealth management structure here in the US? What is the prime objective.
We're going to build organically?
We're going to focus really on a very i think well defined target market of international clients. We have sort of five personas. So think about expats moving to the United States. Think about people have business opportunities in the United States, but maybe they live elsewhere. Think about expats that are American expats moving abroad. So we have all those three personas there in fact five in total that are there to really be served by us in a very unique way.
If we think that about the commercial banking I'm curious to get a sense on this. We're in the foothills of a Cold war, right, whatever way you look at it, there's more talisman Biden administration, maybe more to come from a new administration.
We have got tariffs, we've got angst.
Is that steming any of the commercial banking flow from America into China or into Asia? Is there any diversion or flow or slowed on?
Yeah, Look, it's a great question, and clearly we're in a period of rising tariffs, rising quotas.
Don't know what the Chinese response.
Will be to the latest tariffs put on by the US, but you know, trade liberalism is certainly in a different phase than it was in the past. So I think we have to accept that. Our companies have to accept that. So a couple of responses. One, we're there to provide that advice. Were the largest trade bank in the world, we have abilities to really help companies manage their trade wherever they may be. So if a client is exporting from China, as an example, and once to move that production capacity outside of China, we.
Can help them.
Where the largest foreign bank in India, we're a significant bank in Vietnam, a very big bank in Mexico. So we're really there to help them navigate through this unpredictability. I think that will continue regardless of what happens in the elections. We will have more tariffs, more quotas, a less easy trade environment to navigate going forward.
If I said to you wants the biggest lever for the business.
In the New Yar term, is it going to be right.
Cups from the fad or a clarity in politics and tariffs.
I think it's both. I think you need predictability. Companies need predictability to make their investments. Investors need predictability. What we haven't had really is that predictability. Lots of discussion on interest raise, it's a discussion of winning by how much. Now you've got the quote uncertainties. I think policy needs to be predictable. So if there's a rate cut, fine, if there's not, then it's the question of how companies then react to that.
How do they then.
Build their businesses to exist in a rate environment which is higher than it has been the last fifteen years. But I would argue that in the last fifteen years have been an abnormal rate environment. So if they have that predictability, they can adjust their own production they can adjust how they run their companies and I think they'll do much better, but they need policy predictability.
But here in lies the point for the commercial mind. Then let's just square that away, which is many people say to me they've refinanced a great deal, have refinanced on the retail retail private side.
Do you think that's the same for corporates.
Are they holding back on doing these, doing M and A, doing that capital market as a result of uncertain tea.
Yeah, I think they were in the past. I think last year was certainly a reflection of that.
Uncertainty, and we've jumped over that night.
We have jumped over.
I mean, if you look today, the capital markets are on fire. We've had seven hundred and fifty billion dollars of isisuans in the dech capital markets for investment grade spreads are the tighters they've been in a long long time. The lot of colo formation of capital for the non investment grade market, which I think will continue, and even the equity market. We've seen a lot more IPOs, led by the tech sector, of course, but IPOs are trading very nicely now, a lot more activities, so I think that sense of predictability is coming back, yes, and people have gotten over whether it be six, five, four, three two one, you know, interest rate cuts. I think they're saying, you know what, it's going to be a three and a half to five and a half percent interest rate environment.
We just need to adjust to them.
Put your market on right cuts this year.
I think if you get one, you'll probably doing pretty well. And that's what our helsview is my personal view, you'll get one maxim maximum.
So that kind of a bullish eye like, then what is the flow? What is the flow?
And the book look like here on the on the floor, because that's a very bullish statement by the market.
Where are you in quarter too, Yeah, we're doing well.
There's been a lot more activity both in the debt inequity capital markets, so we feel very comfortable where we are. And our goal really is to support international companies coming into the United States and as well as helping those companies raise capital here, helping our companies raise capital elsewhere as well.
If I said you let's push bark them on a little bit, because if you look at where you are in debt capital markets and equity capital markets, I would say you look, you're not in the top five. You know you're quite a way from the top five. Do you want to be in the top five? What is the ambition for DCM and ECM in that.
Sense, I want to be good for our clients. I've never been a league table guy. I want to focus on helping our clients in the way that we need for them to help. So, as an example, we're going to support a company from the emerging markets who's going to be buying a company the United States that we need to do from an ad advisory perspective, We're going to raise debt in the United States. That is exactly the type of transaction that we were going to focus on. Similarly, we're helping a company US company buy a company in the UK, so we'll use our expertise and our insights, our capabilities in the UK market to raise it capital as well. So league tables don't really look at them. It's really how do we serve our clients. Do we do it well and do we do it in such a way that we provide them value.
But then the natural crawllery is that is if you're not sort of focused on being on the top five, my question would be is do you have the right scale to fill this heighthst dining HUDs in yards Because obviously it's not the same story in Asia as it is here.
This is a very.
Different capital markets to what's happening in Asia at the right at this moment in time. So are you again going back to fit for purpose right size on those teams here.
In the US completely?
In fact, as you look around this trading floor, it's pretty full. We've got about four hundred traders here.
So you would say, no cuts in America in jobs in those businesses.
I would say, we're fit for purpose, you know, and we will always you know, change will always react to It's a dynamic process. But we're fit for purpose because you have to really look at our operations are here to serve not only are you know what we do in the US, but globally. So if there is need to raise capital around the world, you've got to come to the US markets. So we serve hs BC as the center of an activity in the largest capital markets in the world. I would argue you can't be a global bank without being very relevant the United States. We are relevant to our clients in the United States. We're also relevant and very important for HSBC.
To accelerate that pump that you've had in business. Do you think rate cuts will re accelerate that. I know you're on the table for limited cuts, but do you think a shift in the rate environment can materially.
Shift the business.
I think rate cuts will be important, but not determined, so I think yes, it's important to have rate cuts. Again, I'll go back to this predictability statement. If rate cuts come, it provides predictability. I think you'll see that capital markets grow even more.
I think they're poised to do so.
As I mentioned, lots of capital formation money sitting on the sidelines, but it wants to be.
Put to work.
So as soon as we can see predictability, I think you'll have even greater growth than the capital markets, both debt and equity. And I think we're well positioned to takevage of that. We've got lots of discussions going on, lots of sentiment is turning positive today, and they're looking for that opportunity to fully exploit.
So we caught up with David Solomon. We wrote a story from him yesterday. We caught up with him in Paris is what can you tell me about Middle America, corporate and Middle America, because he says higher rates, higher for longer is beginning to bite, is it.
I think it's beginning to bite, certainly for consumers. And you know, if you think about it, over the last years, we've had successive years of inflation, call it fifteen percent on a cumulative basis, Wages haven't gone up by fifteen percent. So yeah, it is biting for certain segments of the population, which is policymakers and as bankers we have to be very sensitive to. I think for our clients, they've adjusted, you know, again historically, these are rates that we have historically seen, you know, three and a half, four percent, five percent, and so they can adjust to those rates. I think they can do pretty well. So we don't see a lot of stress in our credit books. We don't see company he's giving up and saying that it's too difficult environment there, I think being a little cautious until they see rates and where they're going.
But they're not stopping doing business.
They're not stopping to grow, and they have a view that as long as they can manage in this raid environment, they know where the race are going, they know where the economy is going. They have policy predictability. I think they'll be okay.
So let's talk about the element in the room. The chairman will be here. I have it on good authority.
The chairman will be here today.
A little bit later on, he's searching for his third CEO in seven years. Yif the three predecessors were Brits, is it time for.
A yank time for you? I don't know. Thank you very much.
As an American, I appreciate that, I'd say this one. Noel was a great boss no quinn. He and I took our respective roles about the same time, so we worked very closely. He was a great supporter of me. He was a great supporter of this franchise and really an inspiring boss to work for and did a fabuloushop. Mark Tucker is leading an effort along with the board. They're very focused on getting the right person.
I don't think.
I mean, you've been here, You've reconstructed this banking in North America. Do you think it is better culturally for the people of HSPC to have an internal person versus another new person come in.
Yeah, and look, I think we've got a lot of good internal candidates. I think they're clearly as an advantage for having someone who knows the institution. I think the board's going to take that into consideration. They already had a succession plan worked out. They were very focused on making sure that they would have a very quick, efficient and very targeted succession plan. They're looking at both external and external candidates their decision obviously, but I think you know very important that you bring the right person in who has the right culture, the right mindset, and the right set of skills.
Have you put your hat in the ring? How do you intimate to Tucker that you are interested?
I love my job here, thank you very much for that. You know clearly got a lot more to do here, lots of opportunity, So I'm very content of what I'm doing today.
Do you hope then that the next CEO has bigger ambitions for America? I mean, on quite a serious note, it is not you will you lobby hard to grow in size here in the US? Is that important in the next CEO for you?
I think it's important that we have the right sized business here, Yeah, and that we get the resources, we get the attention, we get the support, which we have been I think it fits in however, with the overall strategy of the firm, So there's not going to be an America's only strategy. It's really about how do we fit in, how do we provide that value, how do we provide those capabilities that the firm needs to really be the truly global bank that it is, And so I think we can.
Continue to be a very vital part of that. We will continue to grow.
You mentioned innovation banking, which we're growing already very very quickly, and we're very pleased with that. When there is opportunities, when it fits the strategy, when it makes creates value for the company, that's how we'll grow.
So if he topped you on the shoulder, would you be happy to say is?
I would say, I'm very happy in my job here today, So thank you very much. I got lots to do and I'll be spending a lot of time with entertaining.
Oh well, the fact listen, we have one debate going on in York right getting everybody back into offices, back into trading floors. Finra are fighting back saying that we're offering flexible working. You're probably one of the most flexible banks in the world. How do you see that for Wall Street? How important is it for Wall Street getting back in five days a week?
What do you say to that?
Yeah, so Finra has, as you mentioned, changed the rules and we're adjusting a court light. So and we're going to follow the rules like everyone else.
We are a hybrid bank.
What we did not want to do is to force people to come back simply at a decree. So what we did is we built a building, this building Hudson Yards in the financial capital of the world, which really reflects a lot of input from our employees of why they want to come to the office because we did this during COVID and we didn't know.
If anybody ever wanted to come to the office again.
And so we built something that is very I think conducive to people coming back.
They want to come back.
And so today our overall attendance levels are in eighty percent before we moved less than forty. We're running out of space very quickly, and luckily we just took some additional space in this building. So I think it we will adjust to the funeral rules. We'll make sure that whoever needs to be here five days a week will be here five day a week. But I don't want to decree people coming back. I want them to come back because they want to come back, and they do so, and they're productive, they feel good about it, and that's essentially the environment we have built today.
Michael, thank you so much for joining me, and thank you for inviting us here to Hudson.
Thank you very much for coming as well.