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HSBC sees growth in loans to ultra-rich with art, jets, other illiquid assets as collateral amid high interest rates

  • ‘A lot of our clients still have a huge amount of their wealth tied up in illiquid assets or concentrated assets,’ says private banker
  • In mainland China, the ultra-rich population is set to balloon by 47 per cent by 2028, according to Knight Frank

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A visitor poses for photos with the artwork “Lollipop Bear” by Eguchi Ayane at Art Basel at the Hong Kong Convention and Exhibition Centre in Wan Chai on March 27, 2024. Photo: Eugene Lee
HSBC, the largest bank in Hong Kong and Europe, is seeing more business from ultra-rich clients who are eager to borrow against their “illiquid or concentrated” assets amid interest-rate uncertainty.
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As interest rates look set to remain elevated, HSBC sees opportunities in Asia’s ultra-high-net-worth individuals (UHNWIs), who are often asset-rich but liquidity-constrained.

While high interest rates hurt the flow of the private bank’s lending business, it opens up opportunities on the structured lending side, said Jyrki Rauhio, head of credit advisory for Asia-Pacific at HSBC Global Private Banking.

“A lot of our clients still have a huge amount of their wealth tied up in illiquid assets or concentrated assets,” said Rauhio. The bank has “quite an active pipeline” for loans based on such collateral, which includes art, yachts, jets, single stocks and private equity, he said.
Jyrki Rauhio (left), regional head of credit advisory for Asia Pacific, and Mathieu Rabiller, head of origination, credit advisory for North Asia, at the HSBC building in Central on April 24, 2024. Photo: Aileen Chuang
Jyrki Rauhio (left), regional head of credit advisory for Asia Pacific, and Mathieu Rabiller, head of origination, credit advisory for North Asia, at the HSBC building in Central on April 24, 2024. Photo: Aileen Chuang

“This is an area that is increasingly becoming interesting for clients to raise money. Yes, it costs you. But if you can plough it back into your business, why not? People are tapping these slightly more alternative sources more actively now.”

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