Reforms at HSBC are not radical enough

Banking giant HSBC plans to go back to its roots to boost shareholders’ returns. But investors are not impressed.

HSBC chairman Mark Tucker is struggling to explain the bank’s poor returns

FTSE 100 banking giant HSBC has outlined a “radical restructuring”, reports Richard Fletcher in The Times, after 2019 saw profits before tax fall to $13.35bn, well below the $20bn forecast by City analysts. As part of the move, the group will “shed $100bn in assets and slash the size of its investment bank”, shedding 35,000 jobs in the process. HSBC will also combine its retail banking and wealth-management business unit with its global private-banking operations while reducing its sales and research coverage in European equities and closing a third of its 224 branches in America.

These changes will mean a big fall in the number of HSBC bankers in Canary Wharf, says Jim Armitage in the Evening Standard. But the reality is that they are overdue. HSBC has been “trying to do too much for too little return”. Its global investment bank and “struggling” retail operations in France and the US “will never have the scale to take on the likes of JP Morgan or big domestic rivals”. So it makes sense to cut them and focus on HSBC’s support for corporate clients, as well as moving its assets to places “that will provide it with better returns”, such as Asia.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri