HSBC CEO Michael Roberts Talks Banking Industry

Summary

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Bloomberg Talks: HSBC CEO Michael Roberts Talks Banking Industry

Date: October 16, 2025
Host: Bloomberg
Guest: Michael Roberts, CEO, HSBC

Episode Overview

This episode features a timely conversation with Michael Roberts, CEO of HSBC, covering the current disruptions in the banking industry. The discussion spans critical topics: ongoing US-China trade tensions, the impact of tariffs and supply chain shifts, credit cycle risks, advances in AI and quantum computing in finance, the status of the US dollar as reserve currency, and the shifting geography of global financial flows. Roberts provides an insider’s perspective on how banks and multinational companies are responding to unpredictable macroeconomic challenges.

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Key Discussion Points & Insights

1. US-China Trade Tensions and Supply Chain Adaptation

Timestamp: 00:29–02:16

• Trade tensions have become routine, but recent rounds are escalating unpredictability for international businesses.
• Supply chain resilience is now central to boardroom discussions—firms are actively redesigning networks and even business models to mitigate tariff impact.
• A recent HSBC survey of 5,000 clients found near-universal concern about rising prices and the unsustainability of absorbing 100% tariffs.
• Companies are searching for the “least vulnerable” or most “tariff-proof” operational bases.
• The ever-changing tariff landscape feels like “whack-a-mole,” requiring constant vigilance and strategic flexibility.

“I think supply chain has now come to be one of the probably the most discussed terms in a C-suite today… this current round [of tariffs]… tells you that they’re going to have to significantly change what that is because 100% tariffs, you can’t absorb 100% tariffs.”
— Michael Roberts [01:26]

2. Tariff Costs and Consumer Price Pressures

Timestamp: 02:16–03:09

• Typically, about 70–80% of tariff costs are being absorbed by producers or importers, but the remainder is starting to reach end consumers.
• There’s a limit to how much importers and distributors can absorb; “it will come to an end soon.”
• Delayed capital investments and a cautious approach are resulting from this cost squeeze.

“Most are saying we can’t continue to absorb that much additional cost …therefore it will start shifting more and more to the end buyer, the client or the customer.”
— Michael Roberts [02:38]

3. The Labor Market, Investment Slowdown, and AI

Timestamp: 03:09–03:58

• While companies are not yet resorting to layoffs, hiring is slowing as firms delay big investments amidst uncertainty and cost pressures.
• Predictability is critical for capital allocation; uncertainty stalls spending and hiring.

“I've seen slowing of hiring but [not] real firing today… it's the capital and the investments that you're starting to see slow down quite a lot.”
— Michael Roberts [03:37]

4. Credit Froth, Inventory Financing Fraud, and Due Diligence

Timestamp: 03:58–05:16

• Rising concern about credit cycle risks, especially regarding “inventory financing fraud”—using the same collateral multiple times.
• HSBC is leveraging technological advancements from their trade business for stricter due diligence across all lending.
• Banks must improve collateral verification to stay ahead of increasingly sophisticated fraudsters.

“We’re using technology we developed in our trade business and using it throughout all of our lending platforms… These type of financing arrangements are going to require much more due diligence, much greater technology, much more specific understanding of exactly what you’re financing.”
— Michael Roberts [04:36]

5. AI, Quantum Computing, and Trading Edge

Timestamp: 05:16–06:56

• HSBC partnered with IBM to bring quantum computing to financial markets, focusing on the bond market.
• Combining quantum and conventional computing delivered a 34% improvement in trade prediction—a significant edge in matching buyers and sellers.
• This breakthrough is “initial,” but HSBC expects rapid industry-wide adoption due to the competitive urge to reduce latency and gain predictive edge.
• The future will see traders augmented, not replaced, by quantum power.

“That led to a 34% improvement in our ability to predict a trade… I don’t know how it wouldn’t give an edge, but I think it’ll be, once we roll it out and others roll it out, there’ll be quick adoption by the industry.”
— Michael Roberts [05:57]

“Will it be less traders? Don’t know. But are they going to have powerful machines? Definitely.”
— Michael Roberts [07:06]

6. The Debate Over Dollar Dominance and Reserve Currency Status

Timestamp: 07:24–08:41

• Significant discussions in Asia about dedollarization and concerns over the US dollar’s debasement.
• Despite such conversations, the dollar remains dominant across trade flows and reserves (60–80% in key metrics).
• No viable alternative currently exists; the “twin issue” is what to move to if not the dollar.

“The mere fact that… large holders of dollars [in Asia] are talking about it… tells you something is different.”
— Michael Roberts [07:47]

“If you’re going to go away from dollars, what are you going to do? …There is no other alternative today.”
— Michael Roberts [08:17]

7. Shifting Center of Global Finance

Timestamp: 08:41–09:56

• The US remains the capital market center, but trade and financial flows are rapidly increasing between the Middle East and Asia.
• These new flows are not simply routed through the West; wealth and capital are originating and staying within those regions.
• The emerging world order is more “balanced,” and finance will no longer be as US-centric.
• HSBC is well-positioned owing to its strengths in both Asia and the Middle East.

“I think you’ll see Asia, Middle East coming together more and more, and I think you’ll have a much more balanced equation… those flows will not just go through New York as they used to in the past.”
— Michael Roberts [09:36]

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Notable Quotes & Memorable Moments

• “It’s been a bit of a whack a mole because you have to constantly look at where the next tariffs will come from and that’s been a challenge for many companies.”
  — Michael Roberts [01:47]

• “We understand we could do that but it will come to an end soon.”
  — Michael Roberts on absorbing costs [02:55]

• “Companies need to understand where they’re going to put down a lot of capital, that that capital is going to produce good returns… I’ve seen slowing of hiring but real firing today.”
  — Michael Roberts [03:37]

• “The fraudsters are getting better at it. So we’re going to have to respond to being much better on due diligence.”
  — Michael Roberts on inventory debt fraud [04:52]

• “I don’t know how it wouldn’t give an edge… technology does bring a substantial edge [in trading].”
  — Michael Roberts [06:24]

• “There is no other alternative today (to the dollar). And so that’s the twin issues that you have.”
  — Michael Roberts [08:17]

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Timestamps for Important Segments

• 00:29 — Episode starts; US-China trade tension discussion
• 01:26 — How firms are adapting to tariff unpredictability
• 02:38 — Tariff costs starting to hit end consumers
• 03:37 — Labor market & investment impacts
• 04:36 — Credit froth and new technology for due diligence
• 05:57 — HSBC’s quantum computing breakthrough for bond trading
• 07:47 — Asian sentiment on dedollarization
• 09:36 — The new multipolar structure of global finance

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Conclusion

This episode offers a comprehensive look at the turbulence in global finance from the CEO of one of the world’s largest banks. Michael Roberts shares how top corporates are managing the shocks from geopolitics, technology upheaval, and seismic changes in global financial flows—while emphasizing the need for resilience, smarter use of technology, and a forward-looking, globally aware perspective.

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For listeners interested in finance, global trade, and the frontiers of banking technology, this episode is both insightful and highly relevant.

Transcript

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[Podcast Announcer]

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[Interviewer]

News there's no one better to talk to than Michael Roberts, CEO of hsbc, a bank and CEO of the corporate and institutional bank at the region. I'm just curious, given the fact that HSBC and Wellcome is such a central bank in both trade as well as in both China and in the west, how significant do you see this latest eruption of trade tensions between the US and China? Does this feel different?

[Michael Roberts]

Yeah. No. First of all, thank you for having me today. Look, I think the world has got gotten used to a lot of these tariff changes, although certainly this newest round is yet another bit of unpredictability. I think companies have been now looking for different ways to manage their supply chains. We have a survey that we did right after Liberation Day which I think still hold true today. We surveyed 5,000 clients. So big survey and they all said one all of these tariffs are going to cause a lot of issues. Prices will go up to most of now are looking at their supply chains in the word. I think supply chain has now come to be one of the probably the most discussed terms in a C suite today. And thirdly they're going to change and they may even change business models. So this next round, this current round I think just tells you that they're going to have to significantly change what that is because 100% tariffs, you can't absorb 100% tariffs. So that means there'll be a greater acceleration to where those new supply chains will be. However it is been a bit of a whack a mole because you have to constantly look at where the next tariffs will come from and that's been a challenge for many companies. They really have to figure out what is the least vulnerable place they can be or the most tariff proof place they can be and how do they then export into the US or frankly anywhere to make sure that they can do so as effectively as possible.

[Interviewer]

How much of the extra costs from tariffs been realized and not just tariffs but also the rejiggering of supply chains.

[Michael Roberts]

Yeah so rule of thumb when I've talked to Most people probably 70, 80% is borne by, you know, some the producer versus the importer. The last 20% now is starting to seep into in buyer, the customer. I think most are saying we can't continue to absorb that much additional costs as the importer or the distributor. Therefore it will start shifting more and more to the end buyer, the client or the customer. So that there's been a, I think a strong effort however to try to absorb as much as possible. So I talked to a retailer, high fashion retailer saying me and distributor are the producer out of Asia and me as the distributor are absorbing as much as we possibly can. We understand we could do that but it will come to an end soon.

[Interviewer]

John, were talking to Fed Governor Chris Waller and about the balance between inflation and the labor market and there's this feeling that any kind of inflation is going to be short lived and the effect on the labor market could potentially be pernicious. Are you seeing that companies instead of raising prices, laying off workers or trying to revert to artificial intelligence to bridge the gaps.

[Michael Roberts]

Not yet. However there is a lot of cost pressures. I think there's a delay, a lot of investment. I mean that's the flip side of that because I do think people want predictability. The companies need to understand where they're going to put down a lot of capital, that that capital is going to produce good returns because more predictability. I've seen slowing of hiring but real firing today. And so that's kind of again the flip side of that coin. But really it's the capital and the investments that you're starting to see slow down quite a lot.

[Interviewer]

Meanwhile, we've heard a lot here at the meetings in Washington D.C. about a number of themes AI which we'll get to in a second but also this question around credit froth and an AI related bubble. How much are you getting concerned akin to what JP Morgan's been talking about of a real turn in the credit cycle or some sort of later innings that give you pause and make you more cautious.

[Michael Roberts]

Yeah, look, I do think this is not the first instance of what is inventory financing fraud which is essentially selling, you know, or using the same bit of inventory to finance multiple times. We've seen that in Europe a couple of times as well in the last say nine months. So I am more concerned and something that we're very focused on. So in fact we're using technology we developed in our trade business and using it throughout all of our lending platforms now to try to go through and be very specific that everything we finance is good collateral. It doesn't have more multiple liens on top of it which is really what happened to first brands. It's tough to do. And I think, you know, the fraudsters are getting better at it. So we're going to have to respond to being much better on due diligence. You know, we were not involved obviously directly in first brands, so don't know how much due diligence was done. But I think these type of financing arrangements are going to require much more due diligence, much greater technology, much more specific understanding of exactly what you're financing.

[Interviewer]

The other aspect has been just sort of how much AI has actually boosted productivity, boosted profitability versus been a real call center for the most part. Ken Griffin came out of Citadel saying that he's not seeing evidence that AI programs can really make an edge in financial markets. I know that HSBC has been big in quantum computing and has this test. Are you seeing real gains? Are you actually deploying quantitative strategies from quantitative computing on your, on your trading floors?

[Michael Roberts]

Yeah. So just for those don't know, we had a partnership still do with IBM. We developed quantum computing really for financial markets, focusing on the bond market. And we use both quantum computing and more traditional computing. Brought them together, changed the way we looked at data. There's this thing called representation data that we actually flipped into a more of a quantum computing type of, of mode. That led to a 34% improvement in our ability to predict a trade. So if you were going to make a trade, we get to understand that trade 34% better. To see the matching between buyer and seller is really what it comes down to. So that was very effective. It's an initial study. We did however, test it on multiple quantum computing machines. We did all the statistical analysis. So we really do think there's something there. It can be used for any trading traded asset. So any asset class, I think the power that that brings is going to give an edge. I don't know how it wouldn't give an edge, but I think it'll be once we roll it out and others roll it out, there'll be quick adoption by I think the industry, I mean the same industry that tries to reduce latency to its, you know, smallest possible amount. So I do think technology does bring a substantial edge.

[Interviewer]

Do you think it's going to replace.

[Michael Roberts]

Traders that I don't know. I mean, I think there always be humans involved. But I think it'll help traders quite a lot and I think it'll change really the way traders think about, about it. Because when you have that much compute power and you could really use it, I think today, you know, we use a lot as you said through algorithmic trading. This will just be one more substantial boost to the power of algorithm rhythmic trading that we see today. So will it be less traders? Don't know. But are they going to have powerful machines? Definitely.

[Interviewer]

So the other theme here, and this is something that comes up in pretty much every conversation, is the debasement of the dollar and this question of how much the dollar is losing its heft as a reserve currency internationally. Do you see any signs that people truly are moving away from the greenback?

[Michael Roberts]

Yeah, it's a great question. So I happen to be traveling to Asia right after Liberation Day and I would say that was probably the number one conversation that I was having by very big, very sophisticated, large holders of dollars. And they were quite focused on this idea of de dollarization or debasement of the dollar as a reserve currency. And the mere fact that, that they're talking about it in the terms they were tells you something is different. Now if you look at where the dollar is today, trade flows, reserves, the primary currency of invoicing for most commercial flows, the markets flows, it's all well north of 50%. It's 60, 70, 80% in all those various metrics. It will take a long time to find another reserve currency. And the other biggest question is if you're going to go away from dollars, what are you going to do? And you know, what will be that reserve currency that replaces it? There is no other alternative today. And so that's the twin issues that you have. The conundrum maybe go away from dollars, but what are we going to go to instead?

[Interviewer]

To wrap it all up, there is this feeling that the center of finance has shifted and it's not so clearly in the United States, something that you've been focusing a lot. How do you see the sort of tentacles of finance markets in terms of where they are flowing from, transforming really over the past couple of years?

[Michael Roberts]

Yeah, no, I think there's significant transformation going on. And if you think there was a unipolar world with the US right in the middle of it still is and you know, the U.S. capital markets, the most liquid of the world, still the dominant place to trade. However, you need to look at where trade and commercial flows are going, where financial flows are going. I would look between the Middle east and Asia as an example, substantial increase of flows between those two regions. Regions. And they're not flows that are necessarily coming from the west just being transshipped through those reasons. They're actually wealth that is being re channeled in that region itself. I think you'll see that more and more. I think you'll see Asia, Middle east coming together more and more, and I think you'll have a much more balanced equation. I don't think there'll be as a dominant source of financial flows that you've seen before and, you know, great for us because we have to be very strong, strong in those two regions. But I do think people need to understand that there's a significant change going on and those flows will not just go through New York as they used to in the past.

[Interviewer]

Michael Roberts, thank you so much for taking the time. Really wonderful to speak with you. And John, that was Michael Roberts of HSBC on some of the key topics here and the idea of how much that financial center has shifted.

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