Is the easy stuff done? The stock's had a great run, You've reorganized the business into four divisions. The market broadly has been on board so far. But does the tough bit now come. You've got to deal with the expenses, You've got to figure out exactly what the wealth's division and how it's going to function to become this kind of global leader.
Yeah. No, it's a great question. A lot has been done.
In fact, I think we're very proud about the speed, about the scope of what we've been able to achieve, and really a very short time. It's been less than a year, and I think no one would argue that we probably have done more transformation, more change at ithes we see potentially in his history, and so we're very very proud of what we've achieved. I would love to
say the easy things have always been done. There's always tougher things to do, and particular in an ever changing environment, but we have done it quite a lot, in particular around the organizational aspects of the change.
So what does year two bring?
Year two, I think, in particular for my business, brings much more focus on simplification, much more focus on really just efficiencies, and that by meaning not just cost efficiencies, but just being a better bank, able to respond quicker, to be more agile, all the things that really takes a long time.
Do you think some of that's already in the price in terms of the share price performance thus.
Well, I don't know. I mean I think a lot of it is certainly in there. I think you mentioned the cost You know, as George has said many times, we will achieve the cost savings that we have set out to achieve. We're very confidence and manager team will do that, and so that's fully in training right now. But clearly, you know, we have to respond to the environment, clearly, to respond to all of the policy changes that are coming out from various places. So yes, I think we
have done a lot. I think we will do more to do. I think it will be focused on really making the bank taste better, bank operating more efficiently. I think probably the stock market understands it.
In fact, it's a twenty two year high, is what it is. So it's an.
Extraordinary I think positive response for the market.
But we clearly will always have more to do.
HSBC has exit a series of businesses lately to focus in on that kind of restructuring that you've just outlined and the cost efficiency. As the youth would say, there might be a little bit of folmo there. Do you think you're missing out on this big moment for Europe, this big moment for the UK as people look to diversify away from the States.
No, and I think you're referring to what the investment bank. The change is there because we have actually had a lot more disposals of various types.
Not really.
No, And I think the reason being is that we were never a bultch back in investment bank, and that is something to everybody understand. We were a good investment bank in particular where we have scale and relevance, Asia
in the Middle East being those regions. And if you look at how we really perform and what our value added, it is really the cross border nature of our business and it is really in regions which we have an undeniable leadership position, Asia in the Middle East being those two regions.
And thirdly, those are the reasons for the future. Those are the regions that will grow.
Think about ten years from now, it's not going to be the same. And you know, I grew up investment bank and I understand exactly what everybody's talking about sixty percent of the fees are in the United States. How we are in the United States in our debt business. By the way, we've just reduced our m and a inequity business there, so we can still utilize the value of the capital markets, which are the largest capital markets
in the world. Obviously very important to be there. So we have a lot of deals that go to the US capital markets. That's great, but the future is really Asia in the Middle East.
So critics of that argument would suggest that the experience of five years ago during COVID, when Asian markets are largely closed and a lot of the investors that were very bullish on Asia kind of learned their lesson and really pulled out from that kind of exposure. It's taken a while to even dip a toe back in. Why not necessarily in COVID, but in another circumstance, should people increase their exposure to a region that is historically not.
Always been the most sure bet Because I think that's an enormous amount of wealth creation occurring right now in Asia, whether it be India or China.
I think Hong Kong will become even.
More important capital markets or center for capital markets around the world. I think that you see a huge amount of capital and trade flows going between the Middle East and Asia.
You have two regions that have.
An enormous amount of capital and they're exchanging capital back and forth.
But as any of it coming from the States or from Europe in much.
Wester well still there will always be Yeah.
I mean, if you look at where American companies are expanding, they're expanding those two regions. If you look at were European companies are expanding, they're not expanding in Europe. I think the US is largely done. They're expanding in those two regions. The interesting thing, however, is the amount of money going from the Middle East into Asia and vice versa. I think we have underestimated that is a significant and
I think permanent trend. And that's where we're there is to capture those flows as you have a reordering of the world's capital flows.
Michael, I want to talk about staffing. You talked about some of the headwinds floating around the world diplomatically, put many of them come from the White House. We've got this change on the H one B visa. How much does that affect you because we know, it affects tech heavily able, so affects finance, it does.
You know, our operations in the United States are about six thousand people, so relatively, it's much less than if you're Microsoft or Google or some of the big tech companies or some of our American competitors. We had a flurry of activity this weekend like everyone else. I think it was unfortunate because the initial policy was unclear as to whether it was retroactive or perspective. They've now clarified that it is perspective, so that makes it much easier.
I think it was going to be very disconcerting for a lot of people, in particular those holders of those visas who were traveling abroad.
But are you having are you instructing staff to stay put? Do you think in the longer term you'll have more staff based, say in Asia or in Europe.
You know, again, we don't have a huge amount of the h one visa holders. Yes, I think for all companies, you know, to pay an extra one hundred thousand dollars on top of everything else, it is going to change the way we look at staffing.
I think it for us, it's manageable.
I think for maybe other financial services companies. Similarly, I think for tech companies that is a much bigger issue.
Can I just come back to this, this question of the relationship between the Middle East and Asia and the changing kind of nature of global trade. Crety was critic just spent three weeks in DC talks about dedollarization, this kind of process that is unfolding, this concern that there exists in the United States about that. Do you think that Do you think that relationship is is enduring? Do you think it's been created to a certain extent by
the Trump administration. Do you are we seeing a reordering in bigger, in bigger in sort of in the sort of tectonic plates of the world as a result of what is happening out of DC and forcing other people together.
Yeah, we look. It's a very good question.
The answer is, I don't know, because I think the policy changes quite a lot.
I think clearly, if.
You're not going to have the dollar as the reserve currency that forces a major reordering of the world's economic structure as we know today, I think there is concerned. I've talked to many investors, those in Asia and elsewhere who are quite concerned as to what this means there is no alternative.
That is the reality.
There will not be an alternative for many, many years, and so tomorrow. If the US dollar is not the reserve currency, what is. It's not the Romenbee, it's not the euro. I mean the actual relative change between currencies reserve currencies has not changed for the last twenty or thirty years. In order to have a significant change, I think it takes a long time to do so. If, however,
there is a major policy change. There is, for instance, some discussion of taxing holder foreign holders of US treasuries as an example, that would send a signal that yes, I think you'll have an evolutionary change. Just because of practical reality, you can't do it quickly. But that would introduce a significant amount of uncertainty in the world's economic report.
You talk about Asia and the Middle East becoming to follow on, guys question, this kind of new sphere of growth, can it still hold the level of innovation, financial innovation that you still see from the States. I'll give you an example. In the private markets for example, Yes they're expanding, but the driver of that financial market innovation things like democratizing.
For one k's in terms of getting access to private markets, in terms of the IPOs, in terms of some of the structured products that are out there, it's still driven by the large scale American players. Are you still seeing some of that innovation being done more organically from the Middle East or Asia? Or is this about adopting what starts in the States.
Yeah.
Look, I think clearly from the financial perspective, the US capital market is still the dominant capital market. It's a lot of the financial innovation comes from the US. Having been there for most of my career so very well aware of that. However, I think you'll see one of a very quick adoption of many of those type of changes into both the Middle East and particular in Asia. I think it's not only by the way financial innovation.
I think it's also industrial innovation technology, which is coming out of places like China.
Fast and furious.
I mean, I was also in Silicon Valley the week before last, I was in Israel last week. I will go to China and just to see all of that innovation is pretty extraordinary that's going on, and it's just not American innovation anymore. So I think that's one thing everyone should understand Financially yes, you certainly benefit in the United States by having the largest, most liquid financial markets, and you have some middle largest banks in the world,
so that's very helpful as well. But I don't think that we'll be confined to the US, and I think more and more you'll see US players focusing on places like Asia. We see a huge amount of that the enflow of US capital into Asia. They will bring technology with their Capitalisma what's.
The PC doing in the private markets? Are you growing as fast as maybe some of your peers states look like.
Part of our restructing is to put all of our private credit activities in one place.
Is not in one place before.
So we're doing that as we speak, and that gets to your question about what are the things we're going to be doing going forward.
It's what I call deep bottlenecking. A lot of those issues every bank has.
This is a problem, by the way, is how do you respond to private credit, which is a new type of financing, which it doesn't really necessarily fit with the conventional wave banks have instructuring.
Is there systemic risk in private credit?
We looked at it very closely.
In fact, we've had lots of discussion internally and even on our board. You know, there will clearly be always systemic risk. The question is how much leverage there is. You know, what would be the trigger for that systemic risk is something that we look at very quickly.
Or very closely.
Michael Guy started by asking about the restructuring. Ran I feared he would h's morale. Look, moral's fine, I mean, and no one likes.
To go through restructuring.
And the reason we've moved as quickly as we have, which I must say again is as quick as we could possibly do it is very very sensitive to moral issues, very sensitive to being distracted.
That is very distracting.
I think we're in a position now to say that first phase, that organizational change phase, is coming to an end, and that's probably the most important things. Not that we don't have more to do, is I asked before we will continue to. I think improve the place, make it easier for our bankers and our traders and our salespeople.
That's what we're going to focus on going for.
That's rewiring and replumbing that by its very nature is not quick. And I just told the group the other day, bear with us. We know what we're doing, but it will take a while. But we're doing, I think some very interesting things around AI doing it very interesting them digitization that will make their jobs easier, but also plays through right to the clients. That is really where we see a lot of the value going for