HSBC to sell operations in Brazil & Turkey, focus on ASEAN region
(11 June 2015 – Britain) HSBC Holdings Plc has announced the significant reshaping of its business portfolio, including the separation of its United Kingdom retail bank.
HSBC chief executive Stuart Gulliver said that HSBC would disappear as a high-street name in Britain when it separates is retail bank from its parent company under new legislation.
The announcement included job cuts of up to 25,000 people, with up to 8000 of these job losses in the UK as HSBC shuts 12 percent of its branches across seven counties, including Britain.
HSBC also plans to sell its operations in Brazil and Turkey, which employ a further 25,000 people.
In its statement on 9 June, the company said it is targeting a reduction of Group Risk Weighted Assets (RWAs) of around US$290 billion (A$377 billion), including a reduction of Global Banking & Markets RWAs to less than one-third of Group RWAs.
HSBC intends to sell its operations in Turkey and Brazil, but plans to maintain a presence in Brazil to serve large corporate clients with respect to their international needs.
HSBC is targeting annual cost-saving initiatives of US$4.5-$5.0 billion by 2017, with estimated costs to achieve these savings of US$4.0-$4.5 billion over that period.
In parallel, the company intends to accelerate investments in Asia.
HSBC plans to develop its business in both the Pearl River Delta in Guangdong province, China, and in the ASEAN region.
HSBC will expand asset management and insurance in Asia with the aim of capturing expected opportunities from emerging wealth in the region.
The aim is to deliver above GDP revenue growth from its international network through investment in Foreign Exchange, Payments and Cash Management, and Global Trade and Receivables Finance.
HSBC will leverage opportunities from its market leading position in renminbi internationalisation.
The Group will target a return on equity of greater than 10 percent by 2017, positive adjusted jaws (revenue growth in excess of cost growth), and progressive dividends to shareholders.
“HSBC has an unrivalled global position: access to high growth markets; a diversified universal banking model with strong funding and a low risk profile; and strong internal capital generation with industry leading dividends,” Gulliver said.
“We recognise that the world has changed and we need to change with it.”
“The world is increasingly connected, with Asia expected to show high growth and become the centre of global trade over the next decade.
“I am confident that our actions will allow us to capture expected future growth opportunities and deliver further value to shareholders,” Gulliver said.
In a separate conference call, Gulliver told reporters HSBC will decide by the end of the year if it will relocate its headquarters from London.
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