HSBC Adding Bankers to Boost Startup Lending

HSBC is reportedly expanding its U.S. commercial banking operations to bolster its startup lending.

Wyatt Crowell, head of U.S. commercial banking at HSBC, said in an interview with Reuters Monday (March 11) that the lender plans to recruit around 50 more bankers for his department, aimed at lending to startups in the tech and healthcare fields.

“There’s this void in the market and we’re jumping into it,” Crowell told Reuters. “It’s gone way better than I thought it was going to go, both in terms of the volume of deals and our win rate on the deals.”

He added that the U.K.-based HSBC has landed roughly 250 companies as clients for the venture lending business, closed 35 lending deals and signed another 30 term sheets with customers for an average deal size of $15 million.

“I believe we’ve got traction in the market and that we’re kind of punching above our weight relative to the scale of this team,” Crowell said. “And that plus our desires to take this global is what is driving the next wave of investment.”

The Reuters report notes that HSBC hired around 40 people from Silicon Valley Bank (SVB) after that lender collapsed last March, and now has roughly 60 employees in its innovation banking businesses, focused on early-stage and mid-stage firms.

PYMNTS examined the impact of SVB’s failure on tech funding on Monday, noting that before the collapse, access to capital and debt was easy to come by.

“Now, the pendulum has swung decidedly the other way,” that report said.

“Within tech, there’s dry powder in the VC space, as only half of the $435 billion raised from 2020 to 2022 has been spent. VC outfits raised $67 billion in all of 2023, the lowest tally seen since 2017. The wait-and-see approach, and the reluctance to deploy capital, arguably presents a headwind to growth.”

Last year saw the banking sector cut more than 60,000 jobs as fees declined amid a drop in dealmaking and companies going public. It was one of the worst years for banking layoffs since the financial crisis of 2007 and 2008, when lenders eliminated 140,000 positions.

“There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts,” Lee Thacker, owner of financial services headhunting company Silvermine Partners, told the Financial Times in December, adding, “There are some very nice gifts being sent to bosses at the moment.”

The trend continued into this year, with Santander announcing last week that it was cutting about 3% of its U.S. staff.