Rodrigo Amaral talks to Paulo Maia, the
deputy chief executive officer of HSBC Brasil. For the year ahead,
the UK-headquartered group is looking to promote its HSBC Direct
online arm as well as its successful HSBC Premier mass affluent
package as it looks to cater for all segments of Brazilian

In summing up HSBC’s group strategy last
month, its chairman, Stephen Green, said: “The current economic
crisis validates our focus over the last few years on fast-growing
economies, since it will accelerate the shift in the world’s centre
of economic gravity from west to east.”

The point was to emphasise the importance of
HSBC’s substantial Asia-Pacific franchise to its business

But while the Far East remains central to
future earnings, the Far West – Latin America – has become almost
equally important. HSBC is investing heavily in the likes of
Mexico, Argentina and Panama, while Brazil has become its
third-largest market in terms of branches (after the US and then
UK). For 2008, its Brazilian unit pulled in a record performance,
part of a generally buoyant Brazilian economy (see survey, RBI

Paulo Maia, deputy CEO of HSBC Brasil, says
developing the bank’s internet customer base – it has just rolled
out HSBC Direct in the country – as well as pushing its mass
affluent HSBC Premier brand are two of the main drivers for the
year ahead. It is looking to double the number of Premier customers
over the next few years and is opening new branches as well as
refurbishing old ones to draw in new customers.

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The decision to focus on affluent clients,
offering them investment and saving products as well as more
sophisticated services, comes at a time when wealth management
penetration in the country is low. All Brazilian banks are focusing
on this segment as the retail credit market, which provided huge
profits for Brazilian banks in recent years, has slowed down in the
past few months.

HSBC acknowledges that the credit market was
the main driver of its record performance in 2008: the bank posted
profits of BRL1.35 billion ($600 million) last year. Its retail
banking division, which has 930 branches dotted around the country,
was responsible for some 40 percent of the total, says Maia.

He tells RBI that BRL100 million ($44
million) has been invested in new Premier branches and improving
existing ones. In the past six months, branches have been opened
across São Paulo, the country’s richest state, while work has
started on others in Brasilia, the federal capital, Juiz de Fora,
in a prosperous region of Minas Gerais state, and Joinville, in the
wealthy southern state of Santa Catarina.

Overall, there are about 100 Premier branches
in Brazil, serving 250,000 clients. The goal is to reach the
500,000 mark in 18 months (group-wise, HSBC says it finished 2008
with 2.6 million Premier customers worldwide, up 24 percent

“Our HSBC Premier Centres are exactly like
those you find in the UK. Clients are treated the same way, the
premises are similar, and we offer the same services provided by
the British centres,” Maia said.

Aiming for 10m HSBC Direct

Another priority segment is internet
users aged mainly between 25 and 35. The bank rolled out its HSBC
Direct brand in Brazil in early March, and Maia remarked that,
although the use of the internet in Brazil is still relatively low,
the potential market for HSBC Direct is 10 million. Brazil was
chosen, he added, to develop a more abridged version of HSBC
Direct. “Brazilian clients can open accounts, make investments,
contract a credit card, or request an overdraft limit, everything
via the internet.”

He expects to gather 200,000 HSBC Direct
clients before the end of 2009 and to breach the 1 million mark
next year.

Maia said the bank is not neglecting the
emergent lower middle classes who have benefitted significantly
from Brazil’s economic growth. They are targeted by a local
subsidiary, Losango, a credit provider with about 150 branches and
a strong presence in consumer finance which HSBC acquired in 2003.
Losango offers credit cards to lower income clients and several
kinds of loans, including pay day and car loans.

Losango is one of the tools employed by HSBC
to try and woo more account holders from the lower brackets of the
income pyramid. Last year, HSBC launched a simplified current
account, Conta Losango, which makes it easier for low income
clients to have access to a debit card and access a number of
banking services, including personal loans and redundancy

“In the future, as this client develops
himself, we will follow him too,” said Maia.

He says there is an enormous potential for
HSBC to turn consumers of products offered by Losango into account
holders of the larger retail banking network.

“We have some 10 million retail clients in
Brazil. About 2.7 million are account holders, and the others have
some kind of product offered by the bank, like credit cards,
insurance products or consumer loans. We have a strong focus on
working with all our 10 million clients, expanding the relationship
we have with them.”

‘Growth will not be as

In terms of concerns over Brazil’s
economy overheating, and rising loan delinquencies, Maia said:
“Credit was posting very fast rates of growth in Brazil. But there
was a sharp reduction in growth in the last quarter of 2008 as the
economy slowed down sharply.”

He said there still is appetite for credit in
the country’s ‘real’ economy. The government has also been striving
to unblock credit lines with a number of measures: he notes, for
example, that a recent reduction in taxation on the purchase of
cars is giving a boost to vehicle sales and, consequently, to car
loans too.

“On the other hand, there is no doubt we are
living in a time of high levels of loan delinquency,” Maia warned.
“So we are likely to see further restrictions on personal loans,
and we are not going to enjoy rates of growth as strong as in past