HSBC Holdings PLC (LSE:HSBA) will commit $4 billion to boost its private credit business, as part of a wider trend of institutional capital moving towards alternative assets
Europe's largest bank is seeking to scale HSBC Asset Management’s alternative credit platform to $50 billion over the next five years, amid a trend that has emerged as regulatory constraints and low margins weigh on traditional banking models.
This is according to a Reuters interview with Nicolas Moreau, CEO of HSBC Asset Management.
The bank’s investment is designed to help attract institutional money into its credit funds, tapping into a global private credit market that now exceeds $2 trillion.
This segment has traditionally been dominated by asset managers such as Blackstone and Ares, but banks are increasingly building a presence of their own.
“It’s an arms race,” said Moreau, CEO of HSBC Asset Management, who noted that the backing from HSBC should help bring in additional third-party capital.
While the amount being committed is modest relative to HSBC’s $3 trillion balance sheet, it signals a shift in focus for the group, where new CEO Georges Elhedery has looked to grow revenues in higher-margin areas such as private credit, as returns from conventional lending come under pressure.