Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
2nd August 2011
HSBC - expense cuts not straight to the bottom line
HSBC provided some details of its expense cuts that were promised earlier this year within its half year report. The firm promised expense cuts of between $2.5bn and $3.5bn by 2013 earlier this year.
The first thing that became obvious is that much of the expense cuts are from the sale of retail operations. Therefore whilst acknowledging that the units are low profitability, the expense cuts come with a loss of income as well, so this is not circa $3bn transferred to the pre-tax profit line of the income statement. The best example of this in practice is the recent media headlines mentioning 30,000 job cuts at HSBC . Whilst this makes a sensational headline it is not entirely accurate, a better description would be: HSBC will employ 30,000 less. The bank is instigating a 5,000 job cut amongst ongoing operational units and 25,000 in retail operations that will in the main be transferred with the sale of the units. The sale of nearly 200 branches in the US to First Niagra is a first step in this process.
The 5,000 actual cuts is not new cuts either, with much of the reduction previously announced. It includes restructuring in Latin America, the US, the UK, France and the Middle East. In answer to questions HSBC said that it did not envisage further UK job cuts this year beyond those already announced.
Of course, the bank intends to increase revenues in other areas to make up for the fall in retail banking revenues - and more. It mentioned success in wealth management particularly in Asia and records funds under management.
[Newslink: See HSBC profits up on lower tax and lower losses
Newslink: HSBC Sells US retail branches to First Niagara ]