HSBC: Supporting a New Wave of Nordic Global Explorers

The Nordic nations are recognised for a fearless exploration of the world that, albeit rather more measured in its approach to commercial relationships these days than its Viking forebears, has remained consistent throughout the ages. This outward-looking style adopted by regional companies, especially those in the earlier stages of development, is born, to an extent, out of strong seafaring traditions, underpinned by the need to look for growth beyond the relatively small populations of their own shores.

In the past 100 years or so, the Nordics have seen fit to adopt the English language as a lingua franca that sits very well with many other trading nations. It is also fair to say that the region has been quick to develop one of the best education systems in the world.

Nordic companies have, and continue to benefit from, this fortuitous alignment of its stars, producing some of the most recognisable global brands. The Nordic economies today demonstrate a sharp inclination towards innovation and technology, with solutions for sustainability, especially renewable power, very much a part of that mindset.

While local corporate tax ranges between 20% and 25%, much in concert with other regions of similar economic standing, income tax is relatively high. This, combined with that innate desire to travel, and language skills that put others to shame, Nordic youth is given to long explorations overseas. In so doing, many become comfortable with different countries and cultures at an early age.

“All this leads to some of the most internationally minded corporates coming from this region,” notes Jones. That outlook, he adds, has also established a region where straight-talking avoids confusion, and where long-term business partnerships are the norm. “HSBC’s relationships in the Nordics has already spanned generations with the largest corporates, and we’re aiming to keep building on that approach, forging new, long-lasting, deep relationships with mid-sized international corporates that will benefit from our global network.”

Confronting global challenges

With Nordic-headquartered companies looking to expand further, notably towards Asia where cultural differences with Europe can be marked, the support of HSBC, whose operations sit across all compass points, can be a valuable asset, says Jones. Indeed, understanding how best to tackle the inevitable complexities of global trade – from the regulatory to the cultural – is key to success. A bank that sets itself up to be a global partner has to have the wherewithal to deliver on every front.

“In Europe, the integration of many economies has created models and standards that have driven out much of the complexities of cross-border trade, the euro, no trade tariffs, and free movement of people and capital being examples. But moving further out into the world, trade is not always as simple and straightforward, and it’s here where HSBC’s partnership is valuable” notes Jones.

Restrictions may be applied, including trade tariffs and regulatory controls. For example, the percentage of subsidiary ownership in some countries is restricted and may require joint-venture ownership, and currency controls may apply that effectively trap cash. “Unless properly understood, these rules can make certain markets considerably more challenging than many businesses expect.”

Engaging the network

With a footprint in 60 countries and territories around the world, HSBC makes its presence felt. “We regularly receive awards in many of these markets because we offer deep capabilities locally to assist clients,” says Jones. “We have local teams on the ground, and we will assign a resident subsidiary relationship manager to our corporate clients. It helps us discuss and quickly resolve any issues arising from local complexities.”

Corporate headquarters will sometimes use HSBC to be reassured on the accuracy and suitability of information provided by their local subsidiaries, suppliers or customers. “. We don’t just sell a service to our clients, we take a more consultative approach,” says Jones.

The model, he adds, is “relationship driven”. With the aim to ensure clients receive the services and products that are right for them, seeing to it that their needs are met, he believes it forges the kind of long-term sustainable partnerships that very much fit Nordic cultural expectations. “They want to build trust; they are happy to head out into the world, but enduring relationships remains important.”

That longevity is well represented by the fact that, within the Nordics, regional banking providers do a good job in offering their corporate clients what they need. HSBC, says Jones, is not aiming to displace these Nordic banks, but instead complement their regional service provision with its global footprint.

“There’s a combination of currencies to tackle because while Finland is in the Eurozone, Norway, Sweden and Denmark are not,” notes Jones. “Typically, it requires local regulatory approval to clear those currencies, and to be able to support local payment mechanisms across each market. The regional banks have developed extremely deep capabilities in their respective markets. HSBC supplements that with the same deep global capabilities.”

Indeed, given the relatively small size of these markets, not all international banks have the strategy to match those local capabilities. HSBC’s approach is to focus on that Nordic complementary model, assisting clients’ global reach, because typically the multinationals it’s looking to partner with are of a size where multiple banking relationships are required.

To explain, Jones says the CFO and treasury teams of corporates will usually have a panel of Revolving Credit Facility (RCF) banks with each committing credit amounts to the headquartered business. These facilities are typically priced highly competitively with “very thin margins”, driving these banks to seek ancillary business with their corporate clients to help make global returns above the bank’s cost of capital. The corporates will then look to an appropriate combination of banks that are complementary to that set-up.

“In the Nordics, regional banks will usually handle local requirements, such as local payment needs. HSBC has a role to play as part of their global overlay solution. Within that, certain banking functions may be taken over from the Nordic banks. Trade services is a case in point, because although technically most banks can issue a letter of credit [LC] or guarantee, HSBC handles more trade services flow than any other bank, using its global footprint and recognisability to offer real added value.”

Indeed, HSBC can issue LCs and guarantees all over the world via its network. For a large corporate renting new office space on the other side of the world, or dealing with a new supplier, for example, a guarantee demonstrates its credit worthiness. However, says Jones, sometimes a new landlord will want the added comfort afforded by a recognisable and locally active bank, such as HSBC, should it ever need to claim against that guarantee.

Connect and grow

From a technological perspective, HSBC’s network and capacity to integrate locally provides additional value, observes Jones. Multinationals typically work with a sophisticated accounting platform such as SAP or Oracle, often integrating this with their banks. Of course, HSBC has the technology stack to provide host-to-host connectivity all over the world. ”Clients want visibility of their cash globally, and then to be able to control and optimise the use of that cash,” he comments.

“We have a range of global payment services enabling them to do that efficiently, either as a completely automated set-up, integrated with their accountancy platform, or with manual interventions, according to their needs. A host-to-host connection is often at the more advanced end of treasury operations, and clients often use HSBCnet, our proprietary internet banking tool for Corporates where they are at an earlier stage of the treasury transformation journey.”

There is an option with a global player such as HSBC to take on more strategic involvement with its Nordic clients. The bank is positioned to support strategic financing for M&A and bond issuance, for example. Again, while Nordic banks also have capabilities in these areas, Jones says HSBC is “uniquely positioned”, especially when a company wants to issue, say, a Eurobond or US bond or convertibles, because it has “deep capabilities” in those markets. “These are all areas where we are very strong. In fact, we possess one of the world’s largest balance sheets from a credit perspective.”

HSBC’s “deep pockets” also enables it to fund transformative acquisitions for its Nordic clients. One such example, from September 2024, is Danish logistics company DSV’s €14.3bn acquisition of DB Schenker, the logistics division of Deutsche Bahn. The all-cash deal, financed through an equity raise and debt financing, saw HSBC among a panel of five co-ordinating banks.

“This will be one of the biggest deals of the year in this part of the world,” comments Jones. “We have the balance sheet and the advisory capability to do it. Across our global footprint, we can take a company all the way from initial strategic dialogue, to looking at how to quickly finance a takeover, to capital financing and M&A advisory, through to core flow products such as global payments, cash management, global trade, and global markets.”

Scaling up, reaching out

HSBC is planning to scale up its Nordic operations to meet the needs of regionally based companies as they extend their footprint. The bank has been active in the region since at least 1984. It reduced its physical presence in 2006 with its London office taking over the client base, but with asset management staying. Physical market re-entry for wholesale banking began in Stockholm in 2018, driven by the recognition that clients still want a relationship manager, and access to supporting products, close by.

“We’ve had a relatively light engagement model in the past. Since 2018, our engagement has rapidly increased because demand for our products and services has strengthened significantly, and we now hold the Nordic region up as a huge growth opportunity for us.”

Growth will be achieved through a combination of expanding the global relationship management team, and enhancing trade services, cash management, and global markets, with product specialists on the ground. “There’s an exciting period ahead for both HSBC and corporates in the region because they will be able to reach further and achieve far more with us.”

HSBC is investing heavily in its Nordic operations as it further opens up this regional corridor to its wider international network. Doing so naturally creates an opportunity cost, in that it is scaling-back some countries where the international story is not as strong or it has not attained scale, notably in retail in some markets. However, comments Jones, “we’re doubling down on anything that is core to our connectivity story”.

This means investing more in improving HSBC’s technology stack, and putting more people into its coverage and product teams. “This will enhance services for our clients, and, especially for multinational corporates, and that further projects us as a compelling part of their banking group.”

Travel guide

The other side of this story for HSBC is driven by the pickup of M&A activity, notably Asian and Middle Eastern businesses looking to establish a footprint in the Nordic zone. With a number of attractive, well-established potential assets, incoming investment is looking to buy in to Nordic know-how, a prime example being the region’s excellence in the field of technical sustainability and climate transition solutions. Geely’s purchase of Volvo, and expanding further with the Polestar brand, is a great example of this.

HSBC is keen to help facilitate that ‘return leg’ of commerce, says Jones. The cash accounts needed by incoming businesses to be able to make and receive payments will likely remain the stronghold of the Nordic banks. But other elements – from financing deals and raising capital, to issuing trade service documents and hedging currency risk – remain open to international providers. “We envisage a similar complementary set-up, with a Nordic bank managing the local cash management for the incoming business, and HSBC providing its global reach and functionality.”

HSBC’s Nordic team is currently focusing on increasing its support for regional businesses with global ambition. But assisting expansion into the Nordic region from outside is more than just a watching brief. As Jones says: “We’re here to help all of our corporate clients. If we can offer our global network at both ends of a transaction, that is a powerful proposition.” Indeed, even for the most fearless global explorers, a supportive banking partner with an extensive footprint and product set is a distinct advantage.