Separating out the Channel Islands’ businesses from the UK must have been quite a painful process and a big business distraction?
‘You need to staff up for such a big change programme like that and now that all that heavy lifting is done we can deploy those people into more positive productive stuff; but it was necessary and ring-fencing combined with a bunch of other regulatory changes around the amount of capital banks have to hold, all of those things can and should give consumers more confidence in the banking system. The industry has changed massively.’
How has the industry changed?
‘There’s a lot more transparency. I think the regulators are looking much more closely at who is appointed into financial institutions, at the credentials they have, at the mix of abilities they bring to the table, so the due diligence and the attention to making sure we have the right skills in organisations. The capital planning and requirements around the holding of capital are a lot more stringent. In HSBC, we’ve always been quite conservative and prudent on our risk management on our liquidity and capital monitoring so it’s not been a big burden for us, but that’s been a big pull for some institutions.
‘You’ll hear a lot of organisations talking about good conduct and doing the right thing and I don’t think it’s just words I think genuinely there is a commitment to understand the lessons learnt.’
Ring-fencing was completed in July, what has it meant for your business at HSBC?
‘Separation of the systems gives us a lot more flexibility to build products, propositions and rates for the group of customers across our islands as opposed to being led by the UK where there can be so many different factors. The rates of inflation in the UK are quite different, the cost of living is quite different, so it makes sense that we are able to be a bit more responsive.’
Banking is changing, we are seeing branches close, disruptive banks taking an, albeit so far small, share of the market. Is part of the problem for banks like HSBC, that some retail customers still want branches which are costly, and yet you’ve got to invest and adapt for a new market?
‘Yes and that’s undoubtedly why in the UK you have seen a reduction in the number of branches because the bricks and mortar does cost money and when you look at the footfall and propensity of people to go through the branch doors it‘s been reducing year on year anywhere between 5% and 10 % . I can’t see a day when we won’t have any branches, that’s just not going to happen because the best organisations are responsive to customers wants and needs and there will always be a segment of customers whose preference is to deal with someone in person.
‘We did a review of our branch footprint just after I arrived and re-affirmed the commitment to the branches we do have. We have branches in Alderney and Sark, lots of people asked me, “they’re very small are they going to go?”, and I went and looked with my own eyes and came back and said those branches are needed. Do they make a profit for us? No but they are core to their community and it’s really important that they continue to be there. You’ve got to look at it through multiple lenses.’
YOU CAN READ THE FULL INTERVIEW WITH TRACY GARRAD IN THE DECEMBER ISSUE OF BUSINESS BRIEF
Fill in the form below to receive our monthly newsletter and round-up of the latest issue of Business Brief.