Yahoo Finance HSBC Board Pressures Executives to Deepen Restructuring
The board of HSBC Holdings HSBC has decided that the bank needs to take drastic measures in order to cope with the crisis that has resulted from the coronavirus pandemic. This was reported by the Financial Times.
Hence, the company’s board is now pressurizing executives to deepen the biggest restructuring in the bank’s 155-year history. Per a person familiar with the discussions, HSBC wants a new strategic plan “sooner rather than later”.
Earlier in February, the bank had announced plans of slashing 35,000 jobs, reducing $4.5 billion in expenses and $100 billion of risk-weighted assets by radically shrinking its businesses in the United States as well as Europe. Notably, the bank is planning to redirect resources and invest in growth areas like Asia, from where almost 50% of its revenues come.
The company put a pause on job cuts due to the already worsening conditions that resulted from the pandemic. However, now, HSBC’s board is urging executives to initiate more radical changes, which may include further lay-offs or even a possible sale of its U.S. business along with its retail network in France and operations in smaller non-strategic countries.
In the United States, the company has a small retail network alongside trading and transaction banking operations. While HSBC did shrink its U.S. operations by almost a third in February, management is now contemplating whether the business is viable at all.
A person familiar with the matter said, a U.S. sale “is possible, but it’s very early in terms of making that decision. What HSBC needs to understand is, for better or worse, their opportunity is in China.”
Another person said, “We have to have a business there [the US], there’s no question of that, but the shape we’ve got to look at again.”
Notably, at the time of announcing the first-quarter 2020 results, the company had projected higher expected credit losses during the year as a result of the virus-induced crisis. Also, it expects lower customer activity levels and reduced global interest rates to put pressure on revenues.
Shares of HSBC have lost 41.3% so far this year compared with a 42.1% decline recorded by the industry.
Currently, the company carries a Zacks Rank #4 (Sell).
A few better-ranked stocks from the finance space are mentioned below.
Tradeweb Markets Inc. TW has witnessed an upward earnings estimate revision of 6.6% for 2020 over the past 60 days. This Zacks Rank #1 (Strong Buy) stock has gained 34.9% so far this year.
GAIN Capital Holdings, Inc.’s GCAP current-year earnings estimates increased significantly in 60 days’ time. Further, the company’s shares have appreciated 60.5% year to date. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mackinac Financial Corporation MFNC has witnessed an upward earnings estimate revision of 47.1% for the ongoing year in the past 60 days. This Zacks #2 Ranked (Buy) stock has depreciated 45.7% so far this year.
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