By Simon Clark and Quentin Webb
HSBC Holdings PLC, a global bank ensnared by tensions between
China and the West, is doubling down on Asia, shifting capital,
jobs and investment to the region as it pulls back from the U.S.
and Europe.
The London-based lender, which makes most of its profit in Hong
Kong and mainland China, is already one year into a major overhaul.
But it said Tuesday that it is considering selling its unprofitable
U.S. retail operations and pouring about $6 billion of investment
into Asia in the next five years.
The announcement came as the bank said net profit fell 35% to
$3.9 billion last year as the coronavirus pandemic roiled the
global economy. HSBC set aside $8.82 billion in provisions for bad
loans last year, compared with less than $3 billion in 2019.
Geopolitical tensions have strained Chief Executive Noel Quinn's
ambition for the bank to be a financial bridge between China and
the rest of the world. HSBC last year supported China's imposition
of a national security law in Hong Kong, which the U.S. and British
governments opposed.
HSBC is "moving the heart of the business to Asia, including
leadership, " Mr. Quinn said, though he declined to name bankers
relocating to Hong Kong. "The bank will continue to be domiciled in
London but I think it is important for some of the executive team
to be closer to the growth opportunities, particularly those in
front line roles," he said.
HSBC's strategy may also be seen as a shot in the arm for Hong
Kong, whose reputation as an international business hub is under
threat from China's tightening control.
Mr. Quinn said the bank would "stop trying to be everything to
everyone" and focus on priorities including being a market leader
in serving rich Asian customers. Other areas that HSBC considers
core include retail banking in Hong Kong and Britain, cross-border
trade, and facilitating trade and capital flows into and across
Asia.
The bank said it would invest in its wealth-management and
international wholesale businesses to drive growth in Asia. In the
next three to six years, HSBC also aims to allocate half of all its
capital to the region, based on an industry measure known as
tangible equity, up from 42% in 2020.
HBSC will also spend more to digitize faster and to build on its
strengths in sustainable finance.
The bank's head count fell 3.9% in 2020 to slightly more than
226,000. Last year, HSBC said it would cut 15% of its
235,000-strong workforce over time and reduce business lines and
customer relationships across the U.S. and Europe.
At the same time, HSBC said it might unload some retail
operations, including its U.S. retail business, which recorded a
pretax loss of $547 million last year. HSBC had previously said it
wanted to keep a "targeted retail offering for international and
affluent clients" in the U.S.
"We have a branch network and a franchise in the U.S. that could
be attractive to potential buyers," Mr. Quinn said.
The bank said it was in negotiations over a sale in France,
which is likely to generate a loss if concluded. HSBC, which has
been considering disposing of its unprofitable French retail bank
since at least 2019, is in talks with private-equity firms about
the sale, people familiar with the situation said. Its expansion
into France was built on the 2000 purchase of Credit Commercial de
France for $10.6 billion.
Founded in Hong Kong and Shanghai in 1865, HSBC expanded
world-wide in the 1990s and early 2000s through costly takeovers,
many of which it had to unwind. The bank took a big step into the
U.S. in 2003 with the $16 billion takeover of subprime consumer
lender Household International Inc., but the acquisition saddled
the bank with billions of dollars of soured mortgages and lawsuits
following the global financial crisis of 2008. HSBC sold its U.S.
credit-card business to Capital One Financial Corp. in 2012.
The U.S. expansion brought more trouble for HSBC when the
Justice Department accused it of laundering proceeds from drug
trafficking in Mexico and stripping data from transactions
involving sanctioned nations like Iran to avoid detection. The bank
paid a then record $1.9 billion in 2012 to settle the allegations.
HSBC admitted wrongdoing but avoided a guilty plea or prosecutions
of its executives.
HSBC's London-listed shares lost more than a third of their
value in 2020 but have risen 14% in the year through Monday. On
Tuesday, its shares were down 2% in early trading in London.
HSBC said it would pay a dividend of 15 cents a share, after
previously putting payments on hold for several quarters to comply
with British regulatory demands, angering some shareholders in Hong
Kong.
The international lender said global political frictions
remained a concern. "The geopolitical environment remains
challenging -- in particular for a global bank like HSBC -- and we
continue to be mindful of the potential impact that it could have
on our strategy," it said.
In January, Mr. Quinn defended HSBC's stance on Hong Kong to
British lawmakers, saying he wasn't "going to comment on democracy"
because he is a banker, not a politician.
For 2020, the bank reported a return on tangible equity of 3.1%,
down from 8.4% a year earlier, and dropped its previous goal of
reaching a 10% to 12% return on this basis by 2022. Instead, it
will target a return of 10% or more in the medium term.
Write to Simon Clark at simon.clark@wsj.com and Quentin Webb at
quentin.webb@wsj.com
(END) Dow Jones Newswires
February 23, 2021 07:10 ET (12:10 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Hsbc (LSE:HSBA)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Hsbc (LSE:HSBA)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024