HSBC Has New CEO and $200M

Europe's largest bank, HSBC, is looking to ratchet up its Russia presence by pumping $200 million into its operation in the country and appointing a new Russia CEO, the bank announced Wednesday.

The plans at HSBC, which calls itself "the world's local bank," will see the global brand plunge into retail banking and open up branches in Russia as early as this year.

"We plan to become a very visible brand on the Russian market in the near future," said Stuart Lawson, who has been appointed CEO of the Russian subsidiary, HSBC Bank (RR), pending Central Bank approval.

The announcement is just the latest from an international banking major trying to crack into the Russian retail sector.

While British banks like HSBC and Barclays have appeared slow to latch onto the growing potential of the Russian market, continental European rivals like Austria's Raiffeisen International and France's Societe Generale have made strides into the country's booming retail banking sector.

"One could debate when the right time to enter the market is -- clearly today the Russian middle class is entrenched and very strong," said Lawson, a Russia veteran, who previously headed Citibank's operations in the country.

"It is not too late to enter the market, and there might even be opportunities now that were not evident some years ago," Lawson said.

Although HSBC would be putting the $200 million dollars of equity toward stimulating "organic growth," Lawson did not rule out the acquisition of a Russian bank. The injection of new capital still has to be approved by the Central Bank, HSBC said.

"The right price for the right bank with the right business would be something we could review," Lawson said. "But so far nothing concrete has been envisaged."

There are currently approximately 1,200 banks working in Russia and, although many of them do not offer the full range of standard services, there would still be a broad range of options if HSBC decided to buy.

Analysts say that if HSBC is serious about Russia, it will be better off buying its way in, rather than relying on natural development.

"It's much easier to break into the Russian market by buying something," said Svetlana Kovalskaya, a banking analyst at Renaissance Capital.

Whereas Raiffeisen and Societe Generale have both bought Russian banks, Impex Bank and Rosbank respectively, Citibank's attempts to start from scratch in Russia have met with limited success, Kovalskaya said.

"It would seem that it is easier and faster to buy in than to do it greenfield," Kovalskaya said.

Although HSBC intends to offer its full range of retail services to clients in Russia, Kovalskaya said some areas offer far greater opportunities than others.

"The market is very far from saturation, especially the retail and mortgage sectors," she said. She also singled out the credit card sector as one with untapped potential.

As proof of its expansionist intentions, HSBC has leased a 2,600-square-meter Moscow office site to house its back-office staff, call center, IT operation and training center.

"That will provide us with a foundation from which to scale up our retail offering," Lawson said.

HSBC's Russian operation has spent the last decade focusing on corporate banking, treasury and advisory services to multinational and Russian corporate and industrial clients. The company currently employs more than 200 people.

The focus on Russia is part of a broader plan by HSBC Group to turn its attention to the world's emerging markets.

"Russia, along with the other BRIC countries, is a key strategic focus for the Group," Stephen Green, chairman of HSBC Group, said in a statement.

"HSBC's ambitions in Russia are exemplified by our decision to inject a significant sum of money into the business," Green said.