Countess in Control

HSBC Trinkaus Shifts Gears

Countess HSBC Imago Sven Simon
Carola Schmettow, the bank's new CEO.
  • Why it matters

    Why it matters

    HSBC Group’s German unit hopes new leadership will give it the advantage in the fight for customers among Germany’s small and medium-sized businesses.

  • Facts

    Facts

    • HSBC Trinkaus management board chairman Andreas Schmitz is expected to be named head of Düsseldorf-based bank’s supervisory board.
    • Rudolf Apenbrink and Stephen Price will also assume leadership positions.
    • The annual shareholders’ meeting is June 2.
  • Audio

    Audio

  • Pdf

German financial services company HSBC Trinkaus, a subsidiary of British banking giant HSBC, is fine-tuning its focus and reorganizing its management.

Carola Schmettow, or Carola Countess of Schmettow, as is her full title, who has been on the management board since 2006, is set to become chief executive of the bank.

She will take over at a time when competition for customers in Germany’s hotly contested banking market is only likely to increase. HSBC, which gained a foothold in the German market by acquiring the storied Trinkaus & Burkhardt in 1999, is battling a series of banks looking to expand their lending operations to businesses in Europe’s largest economy.

Ms. Schmettow, 51, wants to let the news of her appointment fade quickly, as it comes at a time when gender diversity and quotas in business leadership positions is a hot issue in Germany. She prefers to focus on her years of experience.

“This bank has always been strong because it was out in the field with customers and didn’t engage in navel-gazing,” she said.

Ms. Schmettow hopes to continue a transformation that was started under Andreas Schmitz, the bank’s current chief executive, who is expected to be named head of the non-executive supervisory board at the annual shareholders’ meeting on June 2.

Mr. Schmitz said he will play an active role and continue to take care of various clients but noted that decision-making will be left to the management board. The private bank’s owners ― the Britain-based HSBC Group and the Stuttgart-based Landesbank Baden-Württemberg ― reportedly backed his move onto the supervisory board.

Under his leadership, HSBC Trinkaus shifted its focus toward growth and has been trying to woo small and mid-sized firms as new clients.

However, a series of other financial institutions are trying to do the same thing. They include Germany’s second-largest bank Commerzbank, long a leader in financing smaller Germany companies, as well as France’s BNP Paribas and various state-backed regional banks across the country. Insurance companies, funds and private-equity firms have discovered the segment as well.

Banks need to be more attentive to the client's orientation and direction, instead of maintaining their classic focus on revenues.

“Competition will become even more intense,” said Ulrich Trinkaus, partner in the consulting firm EY. 

This is also underlined by the annual credit volume for companies, which has stagnated in recent years. Since 1998, banks have not issued loans totaling more than €1.3 trillion per year. This means a bitter struggle for market share has emerged.

This has significant consequences for banks. Price pressure is increasing. A still-unpublished EY survey shows more and more small and mid-sized companies would consider changing their principal bank, Mr. Trinkaus said. In his view, banks need to be more attentive to the client’s orientation and direction, instead of maintaining their classic focus on revenues.

Nonetheless, HSBC Trinkaus believes it is on the right course, Mr. Schmitz said. In a “stagnating bank market, we can point to a significant growth in business volume,” he said.

Total assets climbed by 12 percent to €22.2 billion, or $24.1 billion in 2014. More than 600 employees were hired, and many of them are focusing on the upper echelon of small and mid-sized firms, he said. Altogether, the bank employs 2,650.

The private bank considers its global network to be a crucial advantage. As part of HSBC, the German unit can target internationally active companies. Mr. Schmitz noted that companies these days are not necessarily investing in Germany, but in China and Southeast Asia, as well as in the United States.

HSBC itself has had a bad few months, recently linked to money laundering and assistance in tax evasion. The parent bank’s legal tussles have “caused consternation in us all,” Mr. Schmitz said, but said there have been no consequences up to now at the unit’s Düsseldorf headquarters, he said. That means there have been discussions but no dismissals in Germany.

“We stand together in commitment to our responsibility,” he said.

The expansion of the business involving small and mid-sized companies and the bank’s withdrawal from Luxembourg – it sold its private banking business there to Lichtenstein-based VP Bank in June 2013 – have had an impact on the annual returns of HSBC Trinkaus.

In 2014, pre-tax profits sank by 2.5 percent to €213.6 million. Single-digit growth is expected this year. In 2014, the bank raised €380 million in fresh capital and the bank said plans exist for a further increase in capital by 2018. Ms. Schmettow can soon be expected to announce an exact date for the recapitalization.

 

Julian Mertens is an editor with Handelsblatt Live based in Düsseldorf. To contact him: mertens@handelsblatt.com.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!