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HSBC's plans to deepen the biggest restructuring in its 155-year history could see it sell or close its operations in small, non-strategic countries including New Zealand, the Financial Times reports.
According to the FT, HSBC's board has decided the COVID-19 crisis requires drastic measures. Asked for comment an HSBC New Zealand spokesman told interest.co.nz: “We constantly review our business operations. The Group’s new strategic focus will see Asia continue to be a core engine for business growth over the next few years.”
In February HSBC said it would cut 35,000 jobs, US$4.5 billion in costs and US$100 billion of risk-weighted assets by shrinking its US and European businesses and investment bank. Citing people familiar with the bank's discussions, the FT says HSBC plans to redirect resources to Asia, the bank's historical heartland and profit centre. The COVID-19 pandemic saw HSBC pause lay-offs. However according to the FT, the board is now pressing executives to restart the restructuring and come up with even more radical changes. These potentially include further cuts or even a sale of its US business alongside its French retail network and operations in smaller non-strategic countries, the FT says.
"Some of the more marginal businesses that were previously given the benefit of the doubt are being re-examined, say senior figures at the bank," the FT says.
"Executives are also revisiting a long list of small, non-strategic countries including Malta, Bermuda, the Philippines and New Zealand to see if any of those divisions can be sold or closed. Previous efforts to sell were hampered by a lack of buyers acceptable to local regulators, one of the people said."
HSBC operates in New Zealand as a branch of the Hongkong and Shanghai Banking Corporation Ltd of Hong Kong. As of December 31 HSBC NZ had total assets of $6.64 billion and gross loans of $4.66 billion. In 2019 the bank made net profit after tax of $40.2 million.
In 2012 the FT reported HSBC was considering selling or closing its operations in several countries including New Zealand. HSBC strongly denied this at the time and has remained in New Zealand since.
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8 Comments
They're profitable in NZ but as I understand they're a mess in a lot of non-asian markets, particularly the US. Having operations in NZ seemed to fit with their global brand, but that may not be so relevant anymore.
In my experience, they're way behind the pack on customer service (and in parts of asia probably well behind the likes of DBS). Low interest rates and connectedness to other markets I'm interested in were selling points that helped overcome the numerous down ticks, but now even their rates are more or less travelling with the other banks.
I do not find it hard to understand, they were here during the housing boom and they made the most of it, now they can see (and do not doubt for a second they have reliable data) we are going to go through some hard times in which their profits will be severely reduced, so they prefer to retract. The concept of social responsibility during hard times is hard to grasp by these economic parasites, it should be up to the government to not to let them return when things get better.
I imagine that they would sell their loan book to another institution. When Superbank left NZ, its home loans were sold to GE Money from memory.
I wouldn't imagine that the mortgage contract has a clause saying "If we want to leave NZ, you must repay within 21 calendar days" but you never know.
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