Coffee With: Todd Wilcox, CEO and deputy chair of HSBC Egypt
Coffee With: Todd Wilcox, HSBC Egypt CEO and deputy chair: In the 40 years since entering Egypt, HSBC has become one of the largest multinational banks in the country. Today, the bank — which first came to Egypt as the Hong Kong Egyptian Bank before rebranding to HSBC Egypt in 2001 — caters to clients ranging from the big multinational corporations through to SMEs and women-led businesses.
Today, HSBC Egypt is led by Todd Wilcox (LinkedIn), who took up his post as CEO and deputy chair in July 2020. Wilcox joined HSBC in 2005 after spending four years in China as the head of HSBC China’s Remediation Management Office, the senior executive vice president and deputy chief executive officer of HSBC China and executive director of the board.
A self-proclaimed “gym guy,” Wilcox is up at 5am to get his workout in before heading to the office for 8 or 8:30am. He’s been with HSBC for 16 years and a banker in Canada for 16 years before that, stringing together a career that has taken him from small-town Alberta to Bermuda and China. He was named deputy chairman and CEO of HSBC Egypt in July 2020.
He joined us by video from London, where he was on a roadshow as part of the British Egyptian Business Association’s (BEBA) annual business mission to the UK, headlined Road to COP27: bridging the implementation and financing gap.
- HSBC Egypt recently pulled the trigger on a new fintech lending program to fund tech-enabled companies that are feeding into the country’s digital economy;
- Building green businesses is a key focus right now, and HSBC wants to be the bank of choice for green tech and sustainable projects;
- The most important first step towards net zero? Having reporting standards to define policy and shape decisionmaking;
- Policymakers in Egypt get a thumbs-up for their clear response and action to fallout from the war in Ukraine.
ENTERPRISE: How often do roadshows factor into your day?
TODD WILCOX: Frequently. This BEBA business trip is an interesting example: I find myself talking with people who are really interested in the Egypt story, but don’t know where to start. They don’t know how to crack into the market. We’re offering that to them. That’s why we’re coming back to do an event in July with businesses who are interested in ESG-compliant opportunities in Egypt. This type of approach is not something I’ve seen taken at, say, a Canadian bank.
We’re also looking at non-resident Egyptians — reaching out, say, to our head of retail banking in Montreal, which as you know has a large concentration of Egyptian-Canadians. We want to bank them in Canada — and connect them to our platform so, for example, they can instantly move money between Canada and Egypt. We have a really unique global footprint, and that’s what’s driving how we look at growth.
E: How are you tackling the central bank’s SME lending requirement when you focus so heavily on large corporates?
WILCOX: On the SME front, it’s tough for us as a multinational, but we have a couple of specific areas we’re interested in. We can’t compete in that space with local state-owned banks. They have reach through their large branch network and dedicated systems. So we focus on smaller Egyptian companies that are working with multinationals as suppliers — and we look at areas in which our strategic interests and unique advantages collide, including those within the tech and sustainability space in particular.
E: Is it safe to presume that you’re talking about fintech startups there?
WILCOX: Absolutely, Egypt is a clear MENA fintech hub. It was a surprise for us and for me. These are companies we want to bank, these are companies we want to partner with. We’ve put together a lending program to finance and work with fintech players. The scene here is really strong — Egypt has great venture capital firms and accelerators. If you’ve gone through one of those and you’ve gotten funded? Then odds are good you have the governance, the systems and expertise that make you very interesting to us.
The program is open to tech-enabled companies looking to scale up within Egypt’s growing digital economy. We’re targeting business sectors including fintech, e-commerce, retail and mobility, health, education, and software. The program is also prioritizing companies with sustainable development targets embedded in their business plans, particularly as COP27 is coming up in Sharm El Sheikh this November.
The VC industry here is unbelievably sophisticated. They’ve taught me that the companies they back have cross-border aspirations, that they’re pushing into KSA and the UAE — two of our other regional priority markets alongside Egypt. We’re the right bank for that, and that’s why we’re bringing someone in from New York who has good Egypt experience to focus just on tech.
E: You mentioned ESG a few minutes ago.
WILCOX: Another part of what’s coming up is absolutely the ESG space. As an institution we have net zero targets that we want to hit — and a commitment to move our portfolio into the green space. There are new industries and companies being built; I want to be the bank for anybody building green technology and sustainable projects.
E: HSBC just announced it will be lending USD 1 bn to women-led startups in Egypt and 10 other markets over the coming year. Can you give us color on what that means for Egypt?
WILCOX: It’s really exciting. We’re in 64 markets around the world and Egypt is one of 11 that are participating and I’m pretty pleased with that. This program really fits with our strategy in Egypt, where among other things we’re focusing on the intersection of SMEs, female leadership, and entrepreneurship. Obviously I’m happy the program will see us step up lending here, but it’s about much more than that: It includes advisory from our professionals, classes, and really interesting networking events. Egypt is our only market in the Mideast and North Africa that’s participating.
E: VCs and startups in the US are gearing up for nuclear winter. Part of that is startups worried the economy will fall into recession, but a huge piece right now is that limited partners have stopped writing new cheques to VCs. How does the second half of this year look to you when it comes to the startup space here in Egypt?
WILCOX: I’m still reasonably optimistic. The cost of entry to the space here is very low. The capital you need to get an Egyptian company started and funded is so low relative to, say, the United States, and the potential reward is so great — I think there is a good chance we’ll see VCs decide that the risk-reward equation is so favorable that they’ll continue investing here.
E: What’s your take on how Egyptian policymakers have so far responded to fallout from the war in Ukraine?
WILCOX: I’ve worked in countries around the world, and in my two years here so far I’ve come to one conclusion: Egypt has good policymakers, and I have confidence the final policies they come out with are really solid. Ministers here aren’t politicians, they’re subject matter experts. They’re working with what they’ve got and they’re smart — so you’ve got some confidence that they’re working to make things better.
Finance Minister Mohamed Maait was with us in London last month and we had him in to meet with a number of our clients. He went through Egypt’s policy response in such detail. He is an actuary and a risk manager. That went over very well with the clients. Planning Minister Hala El Said’s traffic light system on where the state is pulling back from the economy is clear. The target for proceeds from privatization — the whole idea that you’ll put in numbers and timelines like USD 10 bn per year for the next four years — that’s great. I think the people at the Sovereign Fund of Egypt are really sharp. The specificity with which they speak tells me the vision comes from the top of the house — and that tells me that they mean business. Egypt, like everyone else, will experience short-term bumps, but we are hopeful we’ll get through it.
E: So you’re optimistic.
WILCOX: Everybody around the planet is coping with external shocks right now, but my take is that Egypt is quite resilient. We’ve been through worse — much worse — and we’ve come out the other side. Egypt will get out of this bottleneck, but it’s going to be a rough year for the whole world. Egypt is one of our three priority markets in this region next to the UAE and Saudi — it’s a market to which we’re committing fresh investment and in which we’re hiring new people.
E: What’s next in digital banking?
WILCOX: I think the next step is doing the back end — it’s moving to the cloud, which we could do very quickly because we use the cloud elsewhere. Now, the Central Bank of Egypt is being cautious, and rightfully so. But I see a time coming where that transformation will start and we should be moving quickly end to end.
Digital is a big part of our existing business, beyond serving our clients in Egypt. Egypt is home to an HSBC global service center — a 1.5k-person processing center that supports France, parts of Europe, the rest of the Middle East on everything from trade processing to call center, and we’re going to expand there. Digital is key to how we’re providing services to other countries here in Egypt.
E: Egypt is hosting COP27 and everyone is working overtime to talk about their green credentials. Other than wanting to bank more green businesses here, what’s your stance?
WILCOX: Our goal as a bank is to be net zero by 2030 and at portfolio net zero 2050. We have different countries and operations, so how do we do it? On the portfolio side, we’re phasing down lending for fossil fuels, but there will be a transition period. We’re still going to support natural gas as a cleaner fuel, for example, but there will be a transition. Across industries, we’re actively talking with our multinational clients here and with our big Egyptian corporates about what they’re doing.
The Egyptians we work with are cross border operators and they know where things are going. The challenge is that the cost of capital for financing carbon is going to go up and the banks are pulling down. That’s why we’re working with businesses like Bechtel and Baker Hughes, among others, to look at how we can decarbonize downstream assets, for example.
E: Are you interested in green hydrogen and green ammonia?
WILCOX: Absolutely. What the SCZone has done in three months is great — three months from planning to implementation. Egypt has the location, the renewable energy resources and the policymakers it needs to do big infrastructure projects like hydrogen. How do you finance and structure something like that? You need government support. You need clear offtake agreements. You need involvement of development finance agencies. That’s all here.
E: Will we see new climate finance products?
WILCOX: The group is investing in climate solutions in collaboration with partners and investors globally to scale them, and fast. Around half the technologies required to meet the climate challenge aren’t yet commercially deployable and need to be rapidly scaled up. We launched the FAST-Infra label that aims to create a consistent global standard, helping to channel private finance into bankable projects in emerging markets through establishing a mainstream, liquid asset class.
We also belong to the Taskforce on Nature-related Financial Disclosures, creating a risk and disclosure framework to move capital away from activities that damage nature.
Over time, I think we’re going to see the “green” label drop away as there’s more and more demand for everything to be green. Net zero is the starting point today for many of the asset managers I’ve met here in London. Every debt issuance for a project of any size needs an ESG assessment. This is the new normal.
E: Can you name-check an example of one of those Egyptian entrepreneurs you just mentioned?
WILCOX: I know the people at BariQ would be comfortable with my talking about what we’re doing with them. The business model makes total sense; they’ve found their niche in the market with plastic recycling, and we’re helping them double their bottle recycling capacity. It’s capital-intensive, so we’re extending longer-tenor finance — but we’re comfortable doing it because they have a great management team, a great board, and great clients. I’m a bit of a nerd for factories and I’ve been through theirs and what I’ve seen is impressive. They’re constantly being tested by their clients to make sure they’re hitting their quality targets.
Then there’s KarmSolar — another great Egyptian company in the green space.
E: How do you measure getting to net zero?
WILCOX: It has to start with definitions and reporting standards. We’re seeing Europe set targets now for accounting purposes and Egypt will also need to make decisions. There’s a central bank committee that includes representatives from the banks that is defining policy. Having those standards will make it much easier going forward.
E: Let’s step back and drill down a bit into HSBC — what does the bank do in Egypt?
WILCOX: This is our fortieth anniversary year in Egypt, and we’re a full-service bank with a full suite of corporate and retail products. From branches to cash management, trade finance to capital markets, we have some 3k people in the bank and the Global Service Center serving clients. It would be hard, in the corporate space, to find a multinational name that we’re not banking — we’re the bank of choice for multinational corporations.
On the domestic side, we have a strong focus on Egyptian companies — companies owned or based here — that are also operating in the Emirates or in Saudi Arabia, or even Europe — I’ve met a number on this trip who are doing business in the United Kingdom. There’s much more international scope in Egypt than you might think on the surface. They’re active and successful in multiple countries.
When it comes to retail, our Premier proposition is for people with significant deposits. We simply don’t have the branch network to compete for the mass market. There are a number of Egyptian banks that are great at mass market — they can do it at scale. But for us, the Premier space is great because it is full of people who are international minded. They’re non-resident Egyptians; they’re employees of our multinational clients.
E: Which segments make the biggest contributions to your revenue mix?
WILCOX: HSBC Egypt is actually one of the most diversified HSBC operations I’ve worked at. About a third of our income is from retail, a third from domestic coverage, and a third is from multinationals, the public sector, and financial institutions.
E: If banking is about taking cheap deposits and then offering expensive loans, how do those numbers work?
WILCOX: The difference is the nature of our clients. We have strong liquidity. We absolutely want more deposits and we’ll defend the deposits we have, but we’re highly profitable and don’t face pressure to bump up the offering on deposits. And that’s not just in Egypt — when I was in Shanghai, in Brunei, in Bermuda, we saw the same thing: When there’s economic pressure, HSBC gets flooded with cash. We refer to it in house as the “flight to quality.”
E: What’s driving growth for you right now?
WILCOX: A few things are going pretty well. We focus on what we call corridors — trade corridors with Egypt that are material and growing. They look a lot like the UAE, like Saudi, which is growing in importance. Europe continues to be an important corridor for us, and we work with many US and Chinese multinationals. We are aggressively picking up the big tech firms as they come in. In every case, we bank a client operating in this corridor and then we try to pick up their local partners, clients, and suppliers. And given our heritage, China is very important to us.
E: That’s the case here in Egypt?
WILCOX: Yes. We are the first in the market to launch a dedicated Chinese desk. We have a team member who is fluent in Mandarin and who knows those businesses well. We’re banking 45 major Chinese companies. We’re also the first bank to introduce RMB in Egypt to support our clients working with China, and we supported the largest local guarantee issuances for a Chinese company in Egypt’s market. We’re active in reaching out to Hong Kong and mainland businesses who hear that there are interesting opportunities in Egypt, then we’ll put on a roadshow and go pitch them: “The Suez Canal Economic Zone is doing ‘x.’”