HSBC Holdings' new CEO John Flint says he's exploring all options for the lender's asset management unit, including a merger, to create a larger player that can compete better as the industry consolidates.
"We continue to do a lot of work around asset management, to explore all the options, but it's too early to give any indications as to what we might do with it," Mr. Flint said on Tuesday when asked if the bank has had, or would consider, merger discussions with a rival.
The bank may be seeking to replicate the success of France's Amundi, which was created in 2010 when Credit Agricole and Societe Generale combined their asset management businesses. Five years later, it held an initial public offering and is now Europe's biggest asset manager, with 1.4 trillion euros ($1.7 trillion) under management after acquiring Pioneer Investments from UniCredit. Deutsche Bank is now planning to sell shares in its asset management unit to raise capital and help the business, which oversees 702 billion euros for clients, compete.
HSBC, with $462 billion under management at the end of last year, is a smaller player in an industry where a flight into cheaper passive funds has put pressure on margins. Bloomberg News reported a year ago that HSBC was seeking to expand in asset and wealth management, targeting three or four acquisitions globally last year, with a particular focus on China and its growing middle class.
Revenue from asset management grew about 7% to $1.1 billion in 2017, contributing only about 2% to HSBC's overall income, company filings show. Assets at the global wealth management business increased 13% last year, though most of that gain was due to market swings and currency effects, the company said in its annual report. Customers in Europe pulled money, partly offsetting inflows in Asia.