An Englishman in Hong Kong

Nick Bryan’s arrival in the custody industry coincided with the discovery of the Asian Tiger economies by Western fund managers. From then on, finding opportunities in new emerging markets would be part of his banking career and his retirement
By Joe Parsons(2147488729)
Nick Bryan

Nick Bryan’s arrival in the custody industry coincided with the discovery of the Asian Tiger economies by Western fund managers. From then on, finding opportunities in new emerging markets would be part of his banking career and his retirement

“You could say I was born and bred for HSBC,” Nick Bryan explains to Global Custodian. His family moved to Hong Kong in 1967, from Malaysia, when he was 12 years old. He subsequently visited the island, every school holiday until 1975, when he joined HSBC. Bryan ended up at the bank’s custody business in January 1991, where he would truly make his reputation. “I worked in HSBC my whole life. At quite short notice in December 1990 I was told my next posting at the bank was to head the sub-custodian business in January, the very next month,” he recalls.

After taking the helm as head of sales for HSBC’s Asia Pacific custodian services network, there were two things that he found apparent: “One, we were based in emerging markets as opposed to the more sophisticated European and US markets that our customers typically came from; and two, Asia in particular was swamped in paper (stock certificates). Following the Asia crash of 87’, there was still paper everywhere.”

Moreover, when he started the role at HSBC’s glamourous building in Hong Kong, Bryan was in fact stationed in the basement. “To set the scene, my office was below ground which has always amused me. In what was then the most world’s most expensive building, our office was down below the ground where people would typically grow mushrooms,” he explains.

However, his arrival in the custody industry coincided with the discovery of the Asian Tiger economies by Western fund managers. At the time, HSBC was offering a sub-custody service in Hong Kong, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

In setting up these services, a key challenge was getting control of the paper. This involved a lot of physical work such as storing it safely, data capturing it, and reporting it back to the clients. But he also faced two more challenges; that being opening a brand new market where they hadn’t been cross border investors before (such as China), or entering a significantly large existing market which previously prohibited foreign investors (such as Korea and India).

However with the gradual opening to foreign investors in these markets through various schemes, it created an appetite amongst global custodians for local custody services that Bryan’s team was well placed to fill. “It was not untypical when a customer came in, often a global custodian representing the fund manager, broker or the counterparty, advising that there client had just bought stock X in country Y, yesterday. We set out to build a consistent template and an integrated platform which would allow people to walk into any of the subsequent 40 markets in which we operated” says Bryan.

With an initial team of just one other executive and two non-executives, Bryan and his team helped open a new market, every six months for the next 17 years. Bryan was the chief architect of the rapid expansion over the next decade and a half, especially after he became global head of custodian services in 1997.

Furthermore during his time in the emerging markets space, Bryan saw a significant reduction of the speed bumps on the national and international platforms, resulting in huge and more complex trading volumes. Yet what he is still most surprised about between the industry today and what it was back then, is how little things have changed. “I think harmonization is like a slow moving glacier, the good news it is moving in the right direction. But I find myself going through my subscription of Global Custodian magazine, and comparing topics being discussed today with those five, 10, or 20 years ago and I think there is a lot of symmetry,” he says. “The stability risks in the markets haven’t been dealt with particularly well, this provides problems for single market harmonization, and this at the end of the day potentially compromises investor protection.”

However on recalling one of his most troublesome experiences, he is brought back to a time in Vietnam when he was engaged with the national regulator about a cross-border certificated investor that wanted to invest in that country but faced a roadblock with the new domestic market infrastructure. “As I recall there was a regulation where certain transactions between two counterparties had to be held by the local brokers, with limited capital, during settlement. We always took on the advocacy role, but in this instance the speed bumps were too high. The regulator treated it as ‘these are our markets, these are our rules’,” Bryan says.

The two options he gave were, “Stick by your rules and risk losing the foreign investor or adapt to global standards and make your market attractive to foreign investors”. He says the lesson from that experience is, “You are always acting as a market advocate. The difference in regulation is typically not so wide now, but having said that, the ‘man on the street’ investor’s view is sometimes well valued. I think we occasionally underestimated giving credit to the domestic market and overlooked the opportunities of looking after domestic investors, as well, in the early days.”

Now retired, Bryan remains stationed in Hong Kong. However he now deals with hungry and thirsty customers rather than cross-border investors with his own food and beverage group and to no surprise, he is currently evaluating opening in new emerging markets. He also founded the MT599 club; a social club for veterans in the custody industry in both Hong Kong and London. But what he has always kept with him is his business policy of integrity. “In my 17 years of custody business we maximized integrity. I genuinely do not recall any incident where that was breached. It should be at the top of everyone’s business philosophy.”