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HSBC courts crown millionaires

London bank targets ČR's 'mass affluent' with expansion

By Victor Velek
Staff Writer, The Prague Post
April 2nd, 2008 issue

VLADIMÍR WEISS/THE PRAGUE POST
HSBC's head of personal financial services, Jiří Zelinka, says the London-based bank aims to add 15,000 clients within five years.
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After a decade spent keeping a low profile on the Czech market, the London-based banking giant HSBC, Europe’s largest bank, has embarked on an expansion aimed at winning over thousands of top-tier clients.
HSBC entered the market in 1997 offering personal investment products and wholesale banking services for corporate clients. But recently the bank extended its local reach by launching HSBC Premier, a global banking package designed for wealthy individuals, labeled as the “mass affluent” in marketing patois.
The bank opened two retail offices to serve its Premier clients in Prague March 10, a beginning of its move into retail banking in Central and Eastern Europe.
“What we have noticed in line with emerging markets around the world is there is a growing connection with the global economy,” said Guy Hamilton, HBSC head of Central and Eastern Europe.
Czechs increasingly travel and do business abroad and the country has seen more business expatriates, Hamilton said. HSBC’s new service will enable them to access banking services worldwide free of charge, he added.
The catch to HSBC’s service is that it will only be available to locals able to keep savings or investments totaling 1 million Kč ($61,400) with HSBC. While making the bank’s services out of reach for much of the country, this bar is set much lower than in Western Europe or the United States, the latter of which requires a minimum balance of $100,000, said Jiří Zelinka, HBSC’s head of personal financial services.
Although there is a wide range of standard banking products on the Czech market, there is an empty niche between mass retail banking and individualized private banking, according to HSBC.
People who are looking for comprehensive international services and asset management but don’t qualify for private banking are ignored by local bankers, and they are going to be targeted by HSBC, Zelinka said.
HSBC has built a reputation in the domestic corporate banking market that may help it in drawing rich individual clients, since top business people are already familiar with the bank, said Marek Hatlapatka, chief researcher at the brokerage Cyrrus.
“Today, affluent clients in general represent one of the most interesting banking segments on the Czech market,” Hatlapatka said.
The competition is still relatively small in the segment and there is definitely room for newcomers, the more so that the booming economy is steadily widening the ranks of the rich, he added.
“Only less than one-quarter of the country’s rich have invested their wealth and are clients of private banks,” said Jan Prchal of the Prague office of Sal. Oppenheim, a German private bank serving several hundred clients locally, most of them Czechs.
There is a large and growing community of wealthy individuals to be approached and won over for private banking services, Prchal added.
According to Zelinka, HSBC has attracted about 60 clients over two weeks following the opening of the Prague offices. The bank hopes to have 15,000 clients within three to five years.
“At the beginning, we expect they will be mainly foreigners but later on, we hope to see more local wealthy people coming,” he said.
Following the start of its Premier service, HSBC plans to launch services for small and midsize businesses, offer mortgages and standard retail banking, though still focused on well-to-do customers.
Today, HSBC Premier is used by 2.1 million customers in 36 countries around the globe. The Czech Republic is the first country in the region where it is available and will serve as a base for further expansion to the east: Poland, Slovakia, Hungary and Russia.

Victor Velek can be reached at vvelek@praguepost.com


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