HSBC fund chief on reinvigorating a business in the age of Covid

Nicolas Moreau has barely said hello when his caretaker cuts him off to exclude any discussion of HSBC’s support for Beijing’s repressive new security law for Hong Kong, a stance that has drawn criticism from political leaders and advocacy groups. ‘investment.

HSBC wants a new banking license in mainland China, so the PR’s caution is understandable. Securing Beijing’s clearance will have significant implications for HSBC’s $529 billion asset management unit, which Mr. Moreau has headed for just over a year.

“The growth of wealth across Asia and the development of the middle class are particularly important to HSBC. We can be a bridge between Asia and the West,” he says.

HSBC already owns 49% of HSBC Jintrust Fund Management, a continental joint venture formed with Shanxi Trust in 2005. The partnership has generated steady but unspectacular growth compared to rivals such as Invesco Great Wall.

The acquisition of a banking license will open a new path for growth, allowing the asset management unit to create new multi-asset funds, cash plus and loans for mainland clients. Mr. Moreau also wants to develop partnerships with online platforms to strengthen distribution across China, which is expected to become the world’s second largest asset management market behind the United States this decade.

Mr Moreau, who was hired in 2019 by HSBC to reinvigorate the underperforming asset management business, embarked on a flurry of activity despite his coronavirus infection in March.

“It doesn’t seem to go away completely,” the 55-year-old says. But he adds there are benefits to working from home and hosting meetings via video.

“You lose the social interaction but we did a lot of meetings with potential clients. It’s very effective from an efficiency standpoint,” he says.

Effective and efficient is also an apt description of Mr. Moreau, according to industry observers who have followed his career. He was previously managing director of the asset management divisions of Axa, the French insurer, and Deutsche Bank, and has just been appointed to the board of directors of the Investment Association, the British trade body.

HSBC Global Asset Management

Established 1973

Assets under management $529 billion

Employees 2,595

Headquarter London

The possession HSBC Group

Although highly experienced, he no doubt faces significant challenges in transforming HSBC’s asset management operations as the parent bank undertakes a massive reorganization that will see 35,000 jobs cut.

He restructured his unit into a single global operating platform, instead of regional teams. Senior management around Mr. Moreau has been reorganized with Joanna Munro becoming global chief investment officer, Brian Heyworth global head of institutional affairs, Christophe de Backer head of wholesale and partnerships and Edmund Stokes as managing director of the exploitation.

One of the main priorities of the unit is to win more business from external customers, rather than relying primarily on parent company input.

“The litmus test of whether we are doing a good job or not is whether third-party clients choose us. It is very important for asset managers owned by banks or insurance companies to compete with external competitors. to strengthen their franchise,” he says.

Changes are underway across the product range where the smorgasbord for all policy has been abandoned in favor of a more targeted approach.

“Choose your battles,” he says, before embarking on a long list of initiatives.

HSBC plans to launch a private lending fund in the UK this year and a euro-denominated version in 2021, with hopes more tranches will follow. Funds are being raised from Asian insurers for private debt infrastructure where HSBC already manages $2.5 billion.

New alpha-generating equity and rate products are being developed for Asian investors, as well as multi-asset strategies that can be tailored to specific client needs, known in industry jargon as ‘solutions’. HSBC also manages $50 billion in hedge funds and private market strategies, which Moreau says will grow.

Another venture unveiled last month was a joint venture with Pollination, a climate change consultancy, which will focus on “natural capital” investments in sustainable forestry and agriculture, clean water and water. other environmentally friendly projects. HSBC Pollination Climate Asset Management is aiming to raise $1 billion for its first fund, set to launch in 2021, and to follow with a $2 billion carbon credits fund. HSBC will be the lead investor in the first fund.

Mr. Moreau sees the Pollination alliance as a model that can be replicated elsewhere and he wants to find new partners for a clean energy initiative and a fintech venture capital fund.

CV of Nicolas Moreau

Born May 8, 1965

Total compensation not disclosed

Education

1988 MSc from Ecole Polytechnique, Paris

Career

1988-91 Arthur Anderson

1991-2016 Various positions including CEO of Axa Investment Managers, CEO of Axa UK & Ireland and CEO of Axa France

2016-18 Joined Deutsche Bank Board of Directors with responsibility for Deutsche Asset Management

2018-2019 CEO of DWS

2019-present CEO of HSBC Global Asset Management

“The world is going through multiple transformations. Financing the transition to a low-carbon economy is one of the most important,” he says.

Eight new ETFs using environmental, social and governance metrics were launched this year to meet growing investor demand for ESG-focused strategies. Mr. Moreau candidly admits that investor interest has not been as strong as hoped. “We raised about $1 billion in new money, which is not as big as expected, but activity has been limited by Covid-19. ETFs are always a priority and we are working on it.

ESG-focused funds are garnering record inflows and increased scrutiny from regulators due to fears that investors may be receiving misleading information about the design of these products.

Moreau insists that well-structured ESG funds can help reduce risk for investors. “We know that governance issues or issues that have a significant social impact can be really damaging, even catastrophic. We want to work with sustainable businesses that will still be in business 30 years from now.

He is not a fan of blunt weapons such as divestment and thinks some rivals are more interested in “populist statements” that easily grab headlines than genuine dialogue with companies to drive change.

“You have to think about how you act. We need the oil companies, but they must adapt their activities to the new reality. Investors can create a real funding crunch if they refuse to take on a new debt offering from a company. Debt foreclosure is more painful than selling a company’s stock.

The pandemic and violent US protests against racial injustice have fueled debate about social inequality and diversity within HSBC.

More ethnic minority fund management trainees will be recruited in 2021 and HSBC is visiting more universities to attract graduates from a wider variety of social backgrounds.

“We are not where we should be, but the culture at HSBC is very inclusive. We know we need to offer people a sense of purpose and an equal chance of success. It doesn’t guarantee we’ll win new business, but it does help build relationships,” he says.

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