Nicolas Moreau has barely said hello when his minder interrupts to rule out any discussion of HSBC’s support for Beijing’s repressive new security law for Hong Kong, a stance that has drawn criticism from political leaders and investment groups.
HSBC wants a new banking licence in mainland China so the press officer’s caution is understandable. Securing Beijing’s authorisation will have important implications for HSBC’s $529bn asset management unit, which Mr Moreau has led for just over a year.
“The growth of wealth across Asia and the development of the middle class is particularly relevant to HSBC. We can be a bridge between Asia and the west,” he says.
HSBC already owns 49 per cent of HSBC Jintrust Fund Management, a mainland joint venture established with Shanxi Trust in 2005. The partnership has delivered steady but unspectacular growth compared with rivals such as Invesco Great Wall.
Acquiring a banking licence will open a new avenue for growth, allowing the asset management unit to build new multi-asset, cash plus and loan funds for mainland clients. Mr Moreau also wants to develop partnerships with online platforms to strengthen distribution across China, which is expected to become the world’s second largest asset management market behind the US this decade.
Mr Moreau, who was hired in 2019 by HSBC to re-energise the underperforming asset management business, has undertaken a whirlwind of activity in spite of being infected with coronavirus in March.
“It doesn’t seem to go away entirely,” says the 55-year-old. But he adds there are advantages to working from home and conducting meetings by video.
“You lose the social interaction but we have done a lot of meetings with prospective clients. It is very effective from an efficiency standpoint,” he says.
Effective and efficient is also an apt description of Mr Moreau, according to industry observers who have followed his career. He was previously chief executive of the asset management divisions of both Axa, the French insurer, and Deutsche Bank, and has just been appointed to the board of the Investment Association, the UK trade body.
HSBC Global Asset Management
Assets under management $529bn
Ownership HSBC Group
Although hugely experienced, he undoubtedly faces significant challenges in transforming HSBC’s asset management operations when the parent bank is undertaking a massive reorganisation that will include 35,000 job losses.
He has restructured his unit into a single global operating platform, instead of regional teams. Senior leadership around Mr Moreau has been reorganised with Joanna Munro becoming global chief investment officer, Brian Heyworth global head of institutional business, Christophe de Backer head of wholesale and partnerships and Edmund Stokes as global chief operating officer.
A top priority for the unit is to win more business from external clients, rather than relying predominantly on inflows from the parent.
“The acid test of whether we are doing a good job or not is whether third-party clients choose us. It is very important for bank-owned or insurance-owned asset managers to compete with external rivals to strengthen their franchise,” he says.
Changes are under way across the product range where the smorgasbord-for-everyone policy has been abandoned in favour of a more focused approach.
“Pick your battles,” he says, before launching into an extensive list of initiatives.
HSBC plans to launch a UK private loan fund this year and a euro version in 2021, with the expectation that further tranches will follow. Money is being raised from Asian insurers for private debt infrastructure where HSBC already runs $2.5bn.
New alpha generation equity and fixed income products are being developed for Asian investors, along with multi-asset strategies that can be tailored for particular clients’ needs, known as “solutions” in the industry jargon. HSBC also runs $50bn in hedge fund and private market strategies, which Mr Moreau believes will grow.
Another undertaking unveiled last month was a joint venture with Pollination, a specialist climate change consultancy, that will focus on “natural capital” investments in sustainable forestry and agriculture, clean water and other environmentally friendly projects. HSBC Pollination Climate Asset Management aims to raise $1bn for its first fund, which is scheduled for launch in 2021, and to follow with a $2bn carbon credit fund. HSBC will be cornerstone investor in the first fund.
Mr Moreau sees the Pollination alliance as a model that can be replicated elsewhere and he wants to find new partners for a clean energy initiative and a fintech venture fund.
Nicolas Moreau’s CV
Born May 8 1965
Total pay not disclosed
1988 MSc from École Polytecnique, Paris
1988-91 Arthur Andersen
1991-2016 Various positions including CEO of Axa Investment Managers, CEO of Axa UK & Ireland and CEO of Axa France
2016-18 Joined management board of Deutsche Bank with responsibility for Deutsche Asset Management
2018-2019 Chief executive of DWS
2019-to present CEO of HSBC Global Asset Management
“The world is going through multiple transformations. Financing the transition to a low-carbon economy is one of the most important,” he says.
Eight new ETFs employing environmental, social and governance metrics were launched this year to tap into rising investor demand for ESG focused strategies. Mr Moreau admits frankly that investor interest has not been as strong as hoped. “We have taken in about $1bn of new money, which is not as strong as expected, but activity has been constrained by Covid-19. ETFs are still a priority and we are working on this.”
ESG focused funds are gathering record inflows and greater scrutiny from regulators due to concerns that investors might be fed misleading information about the designs of these products.
Mr Moreau insists that well structured ESG funds can help reduce risks for investors. “We know that governance issues or problems where there is a big social impact can be really damaging or even catastrophic. We want to work with sustainable companies that will still be in business in 30 years’ time.”
He is not a fan of blunt weapons such as divestment and believes some rivals are more interested in “populist statements” that win easy headlines than genuinely engaging with companies to drive change.
“You need to think about how you act. We need oil companies but they need to adjust their business to the new reality. Investors can create a real squeeze on funding if they refuse to subscribe to a new debt offering by a company. Exclusion of debt is more painful than divesting from a company’s shares.”
The pandemic and violent US protests over racial injustice have fuelled debate about social inequality and diversity inside HSBC.
More fund management trainees from ethnic minorities will be recruited in 2021 and HSBC is visiting more universities to attract graduates from a broader variety of social backgrounds.
“We are not where we should be but HSBC’s culture is very inclusive. We know that we need to offer people a sense of purpose and an equal chance of success. It doesn’t guarantee that we will win new business but it helps in building relationships,” he says.
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