HSBC Republic growing in assets; watching for local expansion options
By Frank Norton
HSBC Republic International Bank continues expanding at a double-digit clip in Miami despite a weak world economy and consolidation in financial services industries.
The international private banking arm of the London-based HSBC Group has increased its Miami assets by 10%-15% annually during the past four years, said Manuel Diaz, bank president and manager.
With about $5 billion now under management, local assets since 1999 have increased by nearly a half. Mr. Diaz said he expects the trend to continue in 2003 despite a possible double-dip recession.
"We're in a downturn but still expect to do well," he said, raising some points about market consolidation.
"Either you compete head-on with your competition and try to win their clients or you buy their assets," the 24-year HSBC Miami veteran said, pointing to Royal Bank of Canada's purchase last year of Barclay's private banking operations in Miami.
"The restructuring of private banking in Miami has not finished yet so we will
continue to see other banks pull out of the region," he said, adding that the need for consolidation among competitors could open doors for further expansion.
"If we find something worth buying at the right price we will look at it for sure," he said. Much of the group's growth worldwide has come through acquisition, notably the purchase of Republic International Bank of New York in 1999, which gave way to HSBC Republic.
Asked which local competitors could be ripe for acquisition in 2003, he said the bank is still digesting other purchases but will not hesitate if the right deal comes along. "We've looked at a few (banks) already," he said.
Recently, Lloyds Bank, Barclay's and Banco Standard Chartered have either transferred assets or are relocating from Miami-Dade County to mitigate exposure to South American economies.
Likewise, brokerages Morgan Stanley and Credit Swiss First Boston last year slashed their Miami wealth-management divisions due to less foreign demand and weak equity markets.
Although private banking, a largely fee-based business, can help reduce banks' dependence on interest revenue from investments, Mr. Diaz' outlook for 2003 remains bleak.
While he expects no economic turnaround this year, he does see continued global security risks affecting investor psychology. And since capital flows are largely perception-based, many foreigners may hold back from investing in Miami.
"But we did very well last year, and that was a nasty year," he said.
HSBC opened in Miami as and Edge Act bank in 1979 with fewer than five employees. It has since grown to a staff of more than 115.