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Net Net: Promoting innovation and managing change

HSBC sees high-level shakeup amid revenue fall

Jerome Favre | Bloomberg | Getty Images

HSBC, one of the largest hedge fund investors in the world, has recently lost four senior people in the private banking unit that is responsible for picking the best money managers for their wealthy clients.

The four are William Benjamin, head of alternative investment research globally; Clark Cheng, head of alternative investment research in the Americas; David Ritterband, head of alternative advisory and discretionary mandates; and Faraz Sultan, global head of portfolio management. They did not respond to requests for comment.

HSBC spokeswoman Katie Amber-Mackin declined to comment on the departures. But she confirmed several new roles that would effectively fill the void the departures created.

They include Simon Garfield as global head of portfolio management (the same role Sultan held in London); Peter Rice, head of portfolio management in Switzerland; and Ilkka Anhava, head of hedge fund research in the Americas (Cheng's position in New York). Amber-Mackin also confirmed that private bank is recruiting for a global head of research.

"We are hiring selectively for growth in this business," she said in an email.

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Geneva-based HSBC is one of the world's largest private banks with $382 billion in total assets under management as of March. All that money from wealthy clients makes the firm one of the largest allocators to hedge funds and other private investment vehicles. HSBC's Alternative Investment Group has $29.4 billion under management and is led by CEO Peter Rigg.

The exact reasons for the departures weren't clear. Cheng, who worked at HSBC from 2005 until earlier this month, is now chief investment officer at Merrimac, a family office. The new positions of Benjamin (at HSBC since 2001), Ritterband (with HSBC since 2008) and Sultan (whose tenure at the bank was unclear) could not be determined.

The shuffle does come as revenues fell overall.

Revenue was $300 million lower after the third quarter compared to the same period a year before, according to HSBC's most recent earnings release. That reflected "a managed reduction in client assets as we continued to reposition the business, and a reduction in broking and trading income reflecting lower market volatility," according to the bank.

"Despite a reduction in client assets, we attracted net new money of $10 billion in areas that we have targeted for growth, including our home and priority markets and the high net worth client segment," the bank added.

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The bank also said it in France for helping French citizens avoid taxes. "Although the outcome of the hearing, and any such investigation, is at this time uncertain, as matters progress, it is possible that any fines, penalties or other terms imposed could be significant," HSBC said in announcing third quarter earnings.

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HSBC has been investing in hedge funds for more than 25 years. It managed the fifth largest fund of hedge funds in the world after Blackstone, Mercer, Cambridge and UBS as of the end of 2013, according to InvestHedge.

The alternatives-focused group also invests in private equity funds and real estate, "alternative" assets to stocks and bonds.