HSBC has started operations in Georgia, the 84th market in which
the group now operates. Tony Turner, CEO of HSBC Georgia, wants to
get the bank up to speed quickly – aiming to achieve as much in the
first three years as was accomplished in 12 years at neighbouring
HSBC Armenia. William Cain reports.

HSBC has launched banking operations in the ex-Soviet republic of
Georgia, with a three to four year target of gaining 10,000
customers and $300 million in assets.

Tony Turner, CEO of the new Georgian franchise, said the bank
can develop much more quickly than its neighbouring Armenian
business, which took 12 years to reach the same benchmarks, largely
because of political complications.

Turner, who ran HSBC Armenia for two years before taking the
Georgia job, said the economic and political outlook for the
country is much brighter than it was for Armenia when HSBC first
set up there.

Georgia is currently regarded as one of the most promising of
the ex-Soviet states, with a population of 4.5 million, real GDP
growth of 12.4 percent in 2007 and foreign direct investment
inflows of $1.6 billion, compared to $542 million in 2005.

Turner added the bank was aiming more widely than its
traditional mass affluent segment, claiming he would “not like to
restrict [the business] in those terms”.

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He told RBI: “It’s worth pointing out here that our
main strategy is retail. We will be serving the commercial and
corporate space as well, but the heart of the bank will be retail.
HSBC Group is at its core a retail bank, which is where most of its
income and profit comes from. The retail proposition is at the
heart of what the group does in emerging markets.”

One of the areas Turner needs to develop first is distribution.
The bank has to battle on until the end of the year with just one
branch and no internet or call centre offering ready, although a
second branch is in the pipeline.

He said: “Distribution is something we have to address. We could
have waited until we had five branches and the internet channel
with call centre ready, but we have to go with what we have got.
The branch we have is a big one, with 40 staff and 13 tellers.”

If the economic situation remains supportive, the bank wants to
establish five branches in the country over the next five years. He
said he doubted whether more than 10 outlets in a country of
Georgia’s size would be cost effective once the bank had
implemented its internet banking proposition and telephone

Challenging tasks

Finding the right premises, implementing systems and
co-ordinating design and construction were all challenging tasks in
the country, he added.

Georgian GDP per capita is $4,700, limiting the retail banking
products likely to be successful. Turner said two basic consumer
banking products would be introduced: a credit card product and a
variable rate mortgage – both of which he said would be firsts in
the country. On the liability side, the bank has a broad range of
products which enable clients to save and invest in the local
currency as well as US dollars.

The variable rate mortgage, which was also the first of its kind
when introduced in Armenia two years ago, is a straightforward
product similar to the one the bank offers in the UK.

Banking products geared to more wealthy customers tend to take
off in countries when the economy hits a GDP per capita figure of
around $7,000. In establishing its presence in Georgia ahead of
that figure, HSBC is hoping to position its brand for when demand
grows significantly for products like pensions, insurance and

The credit card product is, according to Turner, the first
genuine credit card product in Georgia. Many of the local banks, he
added, market credit cards but they only function on the closed
Georgian system and cannot be used for internet purchases. He said
HSBC’s credit card facility would be “a genuine payment tool
through any channel”.

“It’s a fairly standard product range for a fairly
unsophisticated market. We can help our clients with our
international products but I doubt there will be much demand given
local currency savings rates, which are 7.9 percent here. We have
to recognise the market we’re in – but we are able to respond
quickly to demand from clients.”

Marketing HSBC should not be too difficult a task – the bank is
widely acknowledged as having one of the world’s strongest
financial brands.

Turner said: “It’s amazing how prominent the brand is and how
good the name recognition is already. It’s well known in the
[capital] city of Tblisi. But we need to be cautious about a
knock-out marketing blow because we are restricted [in

He said the bank had set aside “several hundred thousand
dollars” to market its presence in the country in its first year,
which would be “similar and more” in the year after. The bank is
running a TV advertising campaign as well as press and advertising
banners in Tblisi which build on its ‘world’s local bank’ marketing

The launch in Georgia brings the number of markets in which HSBC
now operates to 84.

HSBC – countries in
which it has one branch

• Algeria
• Palestinian Autonomous Area
• Cook Islands
• Georgia
• Thailand
• Kazakhstan
• The Netherlands
• Kuwait
• Venezuela

Source: HSBC