A $35 million investment can do wonders to quell local anxieties.
HSBC Bank USA’s announced spending on its Buffalo-area offices put big dollars behind its executives’ pledges that they remained committed to Buffalo, despite other steps that created uncertainty locally.
Local residents had watched HSBC sell off its upstate branch network, severing a sidewalk-level connection to the bank that stretched back to the Marine Midland Bank days. They also saw HSBC decide to move out of the One HSBC Center tower with its logo at the top, sell its U.S. credit card business to Capital One Financial Corp., and transfer its mortgage business to PHH Mortgage.
In a region too familiar with some large, mainstay employers departing, HSBC’s decisions had raised questions about what the bank had in mind for its 3,000-plus remaining Buffalo-area employees. The answer from HSBC: they are staying here, with two office buildings that will be fully renovated.
“Our investment and our commitment to the Buffalo community is certainly a sign of the professional staff that we have here,” said Greg Zeeman, senior vice president and chief operating officer of HSBC Bank USA, the U.S. subsidiary of HSBC Holdings Plc of London.
The bank’s tower lease expires in mid-October, and its improvements to the two other facilities are under way. The moves are a reminder of just how large HSBC’s presence still is in Western New York, even without the branch network it finished selling last year. When the bank’s office shuffling is complete, HSBC’s local work force will be divided roughly equally between the downtown Atrium, which is next to First Niagara Center, and its former mortgage servicing center on Walden Avenue in Depew.
HSBC owns the Atrium and leases the Depew space. Its $35 million in spending, one of the largest capital investments the bank has made in the United States, will also be split about evenly between the two locations. The bank’s local employment base covers a wide range of jobs, including information technology, compliance, risk, human resources, credit, commercial banking, private banking, operations and facilities management.
“All of those functions are here, and they support not just our activity within the U.S., but they support activity on a global scale for the bank,” said Kevin Quinn, senior vice president and managing director for HSBC’s upstate commercial banking business. “I think that’s an important point to note, that when you have an employee base like we have here in the U.S. that has familiarity with the systems and the bank from a historical standpoint, it makes great sense to try to retain that employee base.”
And upstate New York represents HSBC’s second-largest commercial loan portfolio in the United States, second only to New York City, a fact which Quinn says argues strongly in favor of HSBC’s ongoing connection to this region.
“We feel very positive about our presence here from a commercial banking standpoint,” said Quinn, who is a local native and HSBC’s top locally based executive. “Our portfolio continues to expand and grow. We’ve moved well beyond the sale of our branch network, and a good percentage of the proceeds from (the sale of) our branch network were actually redirected into the commercial business across the U.S., because that is a business line that we see we have an opportunity to continue to grow and expand.”
The bank’s growth in that segment, as well as the sale of the branch network, have fueled HSBC’s expansion into some major U.S. cities where the bank did not previously have a presence, Quinn said.
“If you were to look out over 10 years ago, we didn’t have offices in many of the cities that we currently have offices in: Chicago, D.C., Houston, Dallas, Atlanta, Charlotte, just to name a few,” he said.
Local leaders and economic development officials said they are encouraged by HSBC’s decision to pour so much money in its Buffalo-area operations.
“The fact that they’re completely renovating (the Atrium) and the one in Depew really demonstrates that I think they want to have a world-class environment for their employees, and I think it says to their employees, ‘We’re committed to you to stay in Buffalo,’ ” said Christina P. Orsi, regional director for Empire State Development Corp. “So it’s a very good sign for the company and the region.”
Orsi said HSBC’s announcement reinforces the value of professional services, one of the eight industries the Western New York Regional Economic Development Council has identified as strengths to build on for jobs and investment. Time Warner Cable’s recently announced plan to employ 152 people at a service center at the former Sheehan Hospital site also bolsters that sector, she said.
Both of those economic development announcements reflect the Buffalo area’s appeal for back-office operations, with its available, skilled work force and lower costs than some other metro areas, Orsi said.
HSBC executives didn’t promise the $35 million investment will lead to more jobs, but they did not close off that possibility as the business grows. State Sen. Tim Kennedy, D-Buffalo, said he feels HSBC’s investment could lay the groundwork for more hiring.
“I believe because of all the tremendous assets that we have, starting with our work force, it’s ripe for that type of future investment, as well,” Kennedy said.
Richard Tobe, the deputy county executive, said it was significant to him that HSBC made its investment without seeking incentives from the Erie County Industrial Development Agency or Empire State Development.
“They want to be here, without inducement, for their own reasons, which I believe has to do with the quality of the work force and the history here, locational advantages including the low-cost of living, a relatively low-cost business environment, but I think it’s mostly work force,” he said.
HSBC says the new office layouts being implemented at the Atrium and the Depew location encourage collaboration and flexibility among employees. Employees will sit at an available work station and go to work, a setup that is different for those who are accustomed to having an assigned desk.
“I think it’s an adjustment,” Quinn said. “Any time somebody moves, there’s a little bit of an adjustment period. I think what we’ve found during the course of the adjustment, especially when we’ve had new hires, is they become integrated more quickly because of the open footprint. They’re not ‘siloed’ in cubicles or offices. They’re able to easily turn to the person next to them or over the partition and ask a question and move on from there.”
The new office layout also encourages employees to work offsite, perhaps from home, and enables many of them to work from either the Atrium and the Depew sites.
The changes in the workplace reflect how HSBC is organizing its work force for the future. Quinn said HSBC is committed to growing its upstate commercial loan portfolio, and he sees reasons to believe that activity will pick up.
“I think there’s a bit of quiet confidence that’s beginning to build in the business community,” he said. “I think most organizations did the right thing throughout the recession. So they de-levered their balance sheets, they began to build significant amounts of cash. They’re looking for opportunities to invest. I think they’re moving with some caution, not certain which way the economy may turn. But I think they’re confident they have their businesses in a good space right now. And I think they’re beginning to move forward.”
HSBC’s local presence is decidedly different from a few years ago. Other banks have absorbed HSBC’s local branches. By later this year, HSBC’s employees are scheduled to leave the highly visible tower commonly associated with the bank.
But Quinn said HSBC’s $35 million investment indicates the bank’s long-term view of the Buffalo area: “I think it’s a very positive message that a global organization sees opportunity to invest in the U.S., and I think we’ve got a sizable runway in that regard from an opportunity standpoint.”