O HSBC is looking at the possible exit of up to a dozen countries, or one in five of the markets it currently operates in, to sharpen its focus on Asian expansion, Chief Financial Officer Georges Elhedery told Reuters in his first interview since taking office. .
The valuations follow pressure from Chinese shareholder Ping An Insurance, which wants HSBC to prioritize growth in Asiawhere the British bank generates 78% of its total profit.
The continued move to Asia has already triggered planned sales of all or parts of its business in Asia. France, Greece, Russia It is Canadaannounced in the last two years.
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While the markets under review may be relatively small, the move is significant in showing the pressure the bank faces to scale back its local banking business, which once spanned the globe, in order to boost returns and appease its investors.
HSBC does not break down the full performance of each country, making it difficult to identify underperforming markets.
But its operations in Europe and on Latin America may be under scrutiny, with the former registering a net loss in 2022. Latin America contributed just under 5% of the group’s profit.
One country that is not currently under review is the Mexicosaid Elhedery, despite the debate among analysts and investors about the bank’s future presence in the country.
“Mexico is performing very well for us,” said the veteran banker, pointing to the US-Mexico-Canada trade deal and China Plus One strategy, which supported its growth.
“Around 70% of customer acquisition in the consumer business is done by employees of multinational companies that HSBC supports in Mexico, so there are strong synergies with the wholesale business and the package as a whole makes sense for us.”
HSBC shares are up 16.5% this year as interest rates fees Higher earnings lifted its income and began to restore stock buybacks and dividend payments held back during the pandemic.
broader challenges
The bank said on April 14 that a nominal €1 deal to sell its consumer business in France could fall through after rising interest rates raised the amount of capital Cerberus-backed buyer My Money will need to secure regulatory approval.
Elhedery said talks were ongoing but HSBC would not sell the business at any price if the current deal fails.
HSBC’s larger $10 billion sale of its Canadian unit has also been delayed until next year as it struggles to ensure a smooth transition of systems to the Royal Bank of Canada.
“In the short term, the risk that the French and Canadian divestitures do not go through… could put a wrench in the works of its Asia pivot and trigger a new wave of activism,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown .
“We have opportunities for growth, whether through the acquisition of Silicon Valley Bank in the UK, or India, the Middle East… and we expect fee income through the equity business especially to become an ever-increasing component of how we generate revenue,” he said.
The bank is on track to hire about 2,000 private wealth managers in China’s insurance sector over the next two years, adding to the 1,000 hired last year, Elhedery said.
Source: Moneytimes
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