HSBC targets lending against fast-growing private assets after adding SVB’s UK unit to its portfolio
- HSBC to leverage its balance sheet strength to finance wealthy clients’ fast-growing private asset portfolios
- ‘Hong Kong has become an important hub in Asia and globally for private markets’ says HSBC private bank’s APAC credit advisory head Jyrki Rauhio
HSBC sees opportunities to lend against wealthy clients’ private assets, following its acquisition of the UK unit of Silicon Valley Bank (SVB), in a move that leverages its balance sheet strength to finance this fast-growing market.
HSBC, the largest bank in Hong Kong and Europe, is “responding to the evolution in the asset markets”, where private or alternative assets have grown tremendously, said Jyrki Rauhio, head of credit advisory for Asia-Pacific at HSBC Global Private Banking.
“The rise of the private markets poses a challenge and an opportunity for wealth managers and private banks worldwide to respond to it because, traditionally, private banks have been focusing on public markets and operating more like stockbrokers,” Rauhio said.
As wealthy individuals increasingly invest in private assets, which are often illiquid, they require financing services to free up liquidity.
“Usually, [private] banks lend against stocks, bonds, and some mutual funds, but they do not necessarily lend against alternative funds like we do,” Rauhio said. “We can leverage our strong balance sheet and superior in-house expertise on these private funds.”
Rauhio added the Innovation Banking unit brings “additional knowledge, access and opportunity”, especially in the venture space. Before its collapse, SVB was the go-to bank for Silicon Valley start-ups since the 1980s and had access to funds in Asia and globally.
