HSBC recently restructured its business and the reorganization was leaned towards Asia's market growth particularly Chinese wealth acquired abroad. The company sought to combine a private bank that has trillions in assets under management.
HSBC's restructuring plan looks into China's growing wealth from foreign sources by combining the company's private bank with its wealth management and retail banking entities.
The chief executive of HSBC's new wealth and personal banking unit Charlie Nunn announced that the company sees great growth potential in the wealth sector by increasing its revenue by 'double digits'.
It was also revealed that HSBC has its eyes on Hong Kong's currency-issuing banks as a part of its restructuring plan under Nunn. He claimed that the company is expecting a 4.5 billion USD in annual cost reductions. The plan was also said to cause the company to lay off about 35,000 job cuts.
Nunn told South China Morning Post that HSBC wants to achieve the growth structure and do it faster to serve its customers at a simpler level. He also claimed that combining its businesses would enable HSBC to dominate the wealth franchise and capture more market shares.
The report showed that the combined businesses already has a total of 1.4 trillion USD in assets under management. Half of the said assets were revealed to emanate from Asia. The revenue yields from the wealth business also increased by 12 percent at 5.7 billion USD in 2019 alone.
Last month, HSBC announced a strategy update for its third reorganization in 10 years. During such reorganization, the company's former CEO, John Flint, was ousted after taking his post for 18 months.
HSBC, currently Europe's largest bank by assets, and other loan granters were said to have struggled to navigate low-interest rates globally. The said yields were slowing the global growth for the company and gave rise to protectionism.
It was also discussed that HSBC has the largest bank market in Hong Kong and that this market has been adversely hit by the anti-government protests and the public health crisis in China. The Hong Kong economy was then revealed to have experienced a technical recession by 2019 and is expected to contract further financial troubles this year.
According to the senior vice president in Moody's Investor Service's financial institutions group Alessandro Roccati, the end-state business plan of HSBC would now target credit-positive and ambitious goals this year.
He claimed that there have been underlying factors that cannot be controlled by the management including weaker global growth and low-rate environment issues. Other factors that the company has been considering is the slow development of the US-China trade tensions that would create challenges for the restructuring plan this year.
