The market environment for custody in Germany has been difficult in 2010. However, HSBC has seen a further increase in assets held under custody as a result of new and existing clients launching new products. The main growth was in mutual funds and unit-linked life insurance products. In a year when emerging markets were on everyone’s investment radar, HSBC benefited from the emerging market ties of the wider group.
New clients mentioned that the group’s global reach with strong local presence was an advantage. Potential clients were also attracted to the access to global derivatives exchanges.
These attributes led to many client wins, including an important clearing and custody mandate for an Austrian bank as well as two major state mandates.
HSBC has launched a number of initiatives during the year to keep up with client needs. For example, the use of derivatives to hedge risk has gained a new prominence during the last 12 months, and the group developed a cross-border derivatives clearing solution for global futures and options, including collateral management.
Reporting has continued to be important for German institutional clients and, during the year, HSBC has developed an interactive reporting service that is unique in the German market. This has allowed investors to compile their own individualised holdings and transaction reports.
Technology innovation has focused on providing clients with more solid information, particularly on risk. The year has seen the introduction of a new brokerage front end, providing clients with an integrated securities trading and custody system platform that reduces settlement risk. The group has also released an automated trustee interface for insurance reserve holdings and a Morningstar data feed into HSBCfast. Electronic pre-confirmation status advice has been another innovation, which allows fund managers to reconcile trades against custodial records prior to actual market settlement.
HSBC has total assets of €21.2 billion and the bank had a tier I ratio of 9.7% as of June 30, 2010.
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