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HSBC to spend $200 million on Russia expansion

HSBC Holdings Plc, Europe’s biggest bank, is to invest $200 million to expand in Russia and has appointed a new chief executive for the country.

HSBC said on Wednesday Stuart Lawson had been appointed CEO designate “with a mandate to accelerate HSBC’s growth across the country”. Lawson has spent over a decade running banks in Russia, including as CEO of Citibank there. Lawson said HSBC would consider acquisitions but the plan is for organic growth, for which the capital is earmarked. “There will be banks that become available and where appropriate and at the right price we would look at them,” Lawson told Reuters in a telephone interview. “But it is important to have the core systems fully operational before adding on an acquisition.” There are plenty of targets in a country with some 1,200 banks, a legacy of the post-Soviet era, although most are not full-service banks.

HSBC said the new capital will be used to fuel expansion across all business lines. It is subject to Central Bank of Russia and other local approvals. HSBC, whose presence in Russia dates back to 1918, has in the past decade built up its corporate banking, treasury and advisory services to multinational and Russian corporate and institutional clients. It was awarded a license last May to take deposits from retail clients -- allowing the bank to add a retail presence. The bank has bought a 2,600 square meter site to install a back office operation and training centre that is expected to be open by the summer with up to 400 staff. “That foundation will provide us the capacity to scale up our retail offering,” Lawson said. It will be able to support internet and telephone banking as well as a branch network.



Russia’s economy is growing fast, but basic banking products, such as credit cards and mortgages still have low penetration, luring many of the world’s biggest banks to attempt to build businesses there. British banks have lagged continental rivals in Russia’s retail banking market, but HSBC and Barclays are aiming to catch up. Top non-Russian lenders include Societe Generale, Raiffeisen International and Bank Austria Creditanstalt. Lawson said one task was to harness the explosive growth in Russia’s middle class, and for its commercial banking arm to target the small, medium and large companies that are driving economic growth.

HSBC has already opened three new regional representative offices in Ekaterinburg, Novosibirsk and St. Petersburg, which will offer corporate clients a range of commercial banking services. It employs more than 200 people. The plans further a growing focus on emerging markets for HSBC, and Russia is a key strategic focus, said Stephen Green, the bank’s chairman. Lawson replaces Jon Hartley, who will return to Britain. (Reuters)