HSBC, Barclays, and Standard Chartered Target U.S. Market Amid Booming Commercial Banking Revenues

Britain’s largest global banks—HSBC, Barclays, and Standard Chartered—are moving to capitalize on a surge in U.S. commercial banking, as American businesses increasingly seek financial expertise for international expansion. With U.S. commercial banking revenues rising to $429 billion in 2023 from $310 billion in 2019, driven by economic growth and increased margins from higher interest rates, these lenders see major opportunities to grow their U.S. presence, according to new data from consulting firm BCG.

Despite collectively holding less than 7% of U.S. commercial banking revenues, European banks anticipate strong growth, regardless of the outcome of the U.S. presidential election on November 5. Global trade flows continue to drive demand. Stuart Tait, head of commercial banking for HSBC UK, said, “The East-West trade is really important for HSBC because of our very strong presence in Asia … but actually for the UK, the main corridor in terms of business volumes is transatlantic.”

HSBC has observed a notable rise in cross-border transactions: in the year leading to June 30, payments by HSBC UK clients to the U.S. grew by 15%, while transactions flowing from the U.S. to the UK increased by 5%. Rising cross-border mergers and acquisitions further fuel this activity, particularly as U.S. companies find value in the UK’s tech and R&D sectors. “UK valuations look relatively cheap,” Tait noted. HSBC reported that the number of U.S. clients acquiring or launching subsidiaries in the UK rose by 71% year-over-year in the first half of 2024, while UK-based clients expanding into the U.S. increased by 45%.

BCG senior manager Amit Sukhija commented on the strategic advantages for HSBC, saying, “Banks like HSBC can focus on ‘trade corridors’ with the U.S. for commercial banking clients and gain share.” British banks, especially HSBC, have recently shifted their focus away from European markets, where corporate clients in France and Germany were less receptive to their services. This pivot is also partly due to challenges in HSBC and Standard Chartered’s primary Asian markets, where they’ve faced losses amid China’s real estate crisis.

For the British banks, the expansion in U.S. business signals a positive shift after a turbulent history in the market. HSBC’s costly venture into subprime mortgages prior to the 2008 financial crisis marked a major setback, and both HSBC and Standard Chartered have collectively paid over $3 billion in U.S. fines since 2012 for lapses in anti-money laundering controls. Barclays faced a $361 million fine in 2022 for mis-selling securities in the U.S. Following these issues, British banks have prioritized corporate over retail banking in the U.S.

In the upcoming presidential race, British banking executives remain cautious about potential policy impacts. Barclays CEO C.S. Venkatakrishnan remarked, “The question on policy will not just be decided by the presidential election, but what happens in the house, and what kinds of officials are put in, who can get confirmed, and you really won’t know all of this until into the first quarter.”

The U.S. market’s increasing significance for Barclays is evident: its U.S.-sourced revenue grew to 31% in 2023, up from 25% in 2022, driven by a strong performance in trading and an expanding credit card business. Recent third-quarter results showed a 8.4% return on allocated tangible equity in Barclays’ U.S. consumer banking division, up from 5.7% a year prior. The bank has also doubled U.S. dollar deposits at its New York branch in 2023 and again by August this year, as it adds more corporate clients. Barclays has recently been hiring sector experts to attract business from competitors.

Meanwhile, Standard Chartered, traditionally focused on emerging markets, is leveraging its established connections across Asia, Africa, and the Middle East to assist U.S. corporations expanding in those regions. Chief Financial Officer Diego De Giorgi said the bank aims to boost its presence among U.S. financial clients, targeting 60% of investment bank income from the sector, up from 49% in 2023. “Many of our strong relationships… are in Europe and the United States, and we will continue to invest there with financial institution clients,” De Giorgi told Reuters.

By fLEXI tEAM