Arab Today, arab today hsbc slashes costs to fund expansion in key markets
Last Updated : GMT 17:43:28
Arab Today, arab today
Arab Today, arab today

HSBC slashes costs to fund expansion in key markets

Arab Today, arab today

Arab Today, arab today HSBC slashes costs to fund expansion in key markets

LONDON - AFP

HSBC launched deep cost cuts on Wednesday to save US$2.5-3.5 billion (1.7-2.4 billion euros) by 2013, in order to redeploy capital into fast-growing markets around the world. The banking giant revealed the news in a strategic review published ahead of an investor day in central London, and just two days after it unveiled mixed first-quarter results. \"We have launched a programme to target US$2.5-3.5 billion of cost saves\" over the next three years, said Chief Executive Stuart Gulliver in a statement. He added: \"This is not about shrinking the business but about creating capacity to re-invest in growth markets and to provide a buffer against regulatory and inflationary headwinds.\" The efficiency measures will include streamlining IT operations and simplifying the group\'s organisation. HSBC will also conduct a separate assessment of its US cards business and branch network. \"Our strategy is to be the leading international bank, concentrating on commercial and wholesale banking in globally connected markets,\" added Gulliver. \"We will also focus on wealth management in 18 of the most relevant economies and limit retail banking to those markets where we can achieve profitable scale.\" He added: \"We will increase capital deployment discipline, directing investment to faster growing markets and businesses as we scale back elsewhere.\" HSBC had announced on Monday that net profits surged 58 percent to $4.15 billion in the first quarter on lower taxes and bad debts. However, at the same time, Europe\'s biggest bank also revealed that its pre-tax gains were pushed down by rising staff costs and by money set aside to compensate customers in Britain who were mis-sold credit insurance. Pre-tax profit fell eight percent to $5.5 billion, which undershot expectations of about $6 billion. \"We will continue to invest in markets with strategic relevance and high actual or potential returns and will either turn around or dispose of other businesses,\" added Gulliver, who took the reins at HSBC in January. An HSBC spokesman stressed that it was too early to give guidance on headcount because the group was still in the process of the review, and added that growth markets did not just refer to traditional emerging markets. \"This is all about increasing focus and discipline so that we concentrate on fast growing markets that matter for cross-border trade and investment flows,\" the spokesman told AFP. \"By improving capital efficiency we can reallocate capital from underperforming businesses to businesses with significant growth opportunities. \"We will use cost savings to enable us to invest in opportunities that we\'ve identified in wealth management, and global banking and markets and commercial banking.\" HSBC is headquartered in London but the group was founded in Hong Kong and Shanghai in 1865 and the bank regards Asia as its most important region. In morning trade, HSBC shares were down 0.75 percent at 651.30 pence in a slightly lower London market. \"The new chief executive is clearly attempting to stamp his mark on the company,\" said analyst Keith Bowman at Hargreaves Lansdown brokerage. \"A fine line exists between diversity and focused growth, a balance which new management is now trying to readdress. \"The move to reduce costs comes as no surprise. However, the question for investors is whether management can correctly predict which markets to withdraw from and which to accelerate growth.\"

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