HSBC on course for £300 billion valuation, top executive says

[LONDON] Weeks after its market value rose above £200 billion (S$344.6 billion) for the first time in its history, HSBC Holdings is now on course for a capitalisation in excess of £300 billion, according to the head of the lender’s corporate and investment banking arm.Despite a backdrop of brewing geopolitical crises, Michael Roberts said in an interview that Europe’s largest bank would likely get even bigger and held out the prospect of a more than 50 per cent advance in the company’s shares, which are currently trading around all-time highs.“From 200 [billion pounds] to where we are today...to get to 300 is certainly within reach,” Roberts, chief executive officer of HSBC’s corporate and institutional banking told Bloomberg Television’s Francine Lacqua at the World Economic Forum in Davos on Monday (Jan 19). “In our opinion, given where we think we can generate the profit really deserves a much higher rate.”HSBC’s share price – last traded at about 1,223 pence – has continued to edge higher, giving the lender a valuation today of roughly £210 billion, making it by far the biggest financial institution in Europe, ahead of the likes of Spain’s Banco Santander, Switzerland’s UBS Group and France’s BNP Paribas.HSBC has spent the past year engaged in a wholesale restructuring of its global operations, shedding thousands of jobs, merging and closing some business lines, while selling others as part of chief executive officer Georges Elhedery’s drive to simplify the bank and cut costs. Roberts said that the revamp phase was now largely done and that the bank was looking for ways to drive growth. “We’re looking really to the future,” he said, as he warned that the latest geopolitical tumult sparked by US President Donald Trump’s demand to take control of Greenland presented serious challenges.“This is yet more surprise, more chaos, more unpredictability,” said Roberts. “This one, however, is not just a ‘Liberation Day,’ this, obviously, is politically-driven, and that’s a little bit different.”Like all businesses, HSBC is looking at how to integrate new technologies such as artificial intelligence and digital assets into its operations. Roberts said that he didn’t think AI would lead to mass layoffs at HSBC and instead said the technology would be an enabler, helping staff to be more productive.“Banks are built on process and procedures,” said Roberts. “They’re the perfect user going forward, and I really hope we can just free up all that time.” Roberts said that bankers spent far too much time on administrative work rather than meeting clients and that AI would help redress the balance.The increasing use of digital assets in financial markets was inevitable, said Roberts. “Without doubt, most trading will be on a tokenised basis,” he said, adding that the incorporation of quantum computing into trading businesses was also on the way.“Trading of all asset classes, I mean, none will be immune, is going to go through a fundamental change,” he said.HSBC has been among the leaders in the financial sector in embracing quantum computing and last year announced the results of a trial of the technology in its trading unit where it showed the potential for quantum technology to improve the pricing of financial assets. BLOOMBERG