0005.HK - HSBC Holdings plc
| Previous close | 60.900 |
| Open | 60.650 |
| Bid | 60.900 x 0 |
| Ask | 60.950 x 0 |
| Day's range | 60.600 - 61.200 |
| 52-week range | 55.300 - 70.500 |
| Volume | 15,942,797 |
| Avg. volume | 23,377,006 |
| Market cap | 1.231T |
| Beta (3Y monthly) | 0.69 |
| PE ratio (TTM) | 12.34 |
| EPS (TTM) | 4.935 |
| Earnings date | N/A |
| Forward dividend & yield | 3.14 (5.22%) |
| Ex-dividend date | 2019-10-10 |
| 1y target est | 10.07 |
- Reuters - UK Focus
Bank of England to publish 2019 bank stress tests on Dec. 10
- Reuters - UK Focus
BNP frontrunner to take over Deutsche Bank derivatives unit - report
BNP Paribas is the frontrunner to take over Deutsche Bank's business that sells certificates and warrants to retail investors, a German newspaper reported on Friday. Boersen-Zeitung, which cited no sources, said analysts had estimated the unit's value at 400-500 million euros ($445-$556 million). BNP declined to comment.
- Bloomberg
China’s Economy Slows on Weak Investment, Testing Global Growth
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. China continued its grind to more moderate growth in the third quarter as investment slowed, providing little upside for a global economy flirting with its first recession since 2009.Gross domestic product rose 6% in the July-September period from a year ago, the slowest pace since the early 1990s and weaker than the consensus forecast of 6.1%. On the upside, factory output improved and retail sales held up, but slowing investment growth remained a concern.Policy makers appear to be allowing the world’s second-largest economy to drift lower as they seek to clean up the financial system and curb excessive credit growth while they fight a confidence-sapping trade war with U.S. President Donald Trump. With a drop off in exports to the U.S. expected to continue as long as tariffs remain, the economy is likely to keep struggling as falling factory prices hit company profits and rising consumer inflation hits spending power.Even with the slowdown, year-to-date growth of 6.2% suggests the government can hit its target of an expansion of 6% to 6.5% for 2019. Until now, officials have focused on limited, targeted measures such as reserve-ratio cuts and credit support, wary of expanding the nation’s already heavy debt load. A meeting of the Communist Party’s top leadership due in the coming days may present an opportunity to review stimulus settings.“China’s economy is grappling with both external and internal headwinds,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. “Exports started to contract of late amid wobbly global demand and rising tariffs in the U.S. Despite some stabilization in retail sales and industrial production in September, overall demand continues to soften, reflecting still relatively tight credit conditions.”Stocks pared earlier gains after the data, with the Hang Seng slipping 0.5% and the Shanghai Composite falling 1.3%. The offshore yuan was weaker at 7.0850 per dollar at 2:43 p.m. in Hong Kong.Further Details from the Report:Factory output rose 5.8% in September, retail sales expanded 7.8%, while investment gained 5.4% in the first nine monthsInfrastructure investment growth picked up to 4.5% in the nine months to SeptemberThe contribution of net exports to GDP growth picked up to 19.6% in the 9 months through September. That’s not necessarily an indication of economic strength though, as it was likely led by a pullback in importsConsumption’s contribution increased to 60.5% from 55.3%; Investment’s contribution slowed to 19.8% from 25.9%The surveyed jobless rate remained at 5.2%Nominal growth, which is un-adjusted for inflation, slowed to 7.6% from a year earlier, according to Bloomberg calculations. That’s the slowest since the third quarter of 2016.The nominal growth rate “tends to capture the cycles in the economy better,” according to a research note from Trivium China. It also gives a better idea of whether growth is fast enough to repay the nation’s growing debt, as lending is denominated in nominal values and isn’t adjusted for inflation.The slowing nominal rate indicates that the deflator, a reading of inflation across the economy, dipped to 1.6%.As China slows, it is buying less from the rest of the world, pushing its trade surplus higher and dragging on global economic growth. That’s having a knock-on effect on trade partners, from developed economies like Germany to commodity suppliers.Global policy makers including People’s Bank of China Governor Yi Gang are meeting in Washington this week for the International Monetary Fund’s annual meetings. The IMF set the tone for the gathering, making its fifth-straight cut to its forecast for 2019 global growth, which is on pace for the slowest expansion in a decade.The long-term slowdown underlines the challenge for companies doing business in China now, where high sales growth had once been a given.French distiller Pernod Ricard SA said growth in China slowed to 6% in the latest three months, less than one-quarter of the year-earlier rate. Nestle SA said sales in the country were flat for the first nine months, while Unilever said business there “slowed a little” in the latest period.What Bloomberg’s Economists Say..“China’s 3Q GDP growth, while avoiding falling below 6% for now, was in line with our view that the consensus forecast appeared optimistic. September industrial production growth was unexpectedly strong, but a further deceleration in investment growth underscores the challenges of using infrastructure spending to support growth.”Chang Shu and David Qu, Bloomberg EconomicsFor the full note click hereInvestors are looking for further confirmation of a detente between the U.S. and China on trade, as signs emerge that an agreement struck between negotiators in Washington this month and due to be signed by President Xi Jinping and Trump in November isn’t water-tight.China’s Ministry of Commerce Thursday signaled that Beijing is still pushing for the removal of all tariffs imposed by the U.S. since the trade war began -- a concession that’s not currently on the table.“The economy would almost surely slow further with the current policy stance,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “Due to the lack of demand now, the government has to create more demand by itself through infrastructure spending. Even a trade deal is not an substitute for an escalation of stimulus.”\--With assistance from Kevin Hamlin, Rachel Chang and Carolynn Look.To contact Bloomberg News staff for this story: James Mayger in Beijing at jmayger@bloomberg.net;Tomoko Sato in Tokyo at tsato3@bloomberg.net;Miao Han in Beijing at mhan22@bloomberg.netTo contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James MaygerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
HSBC Considers Equity Pullback in London, New York, Germany
(Bloomberg) -- HSBC Holdings Plc may partially exit stock trading in some developed Western markets as part of a cost-cutting drive by Noel Quinn, the interim chief executive who wants the top job on a permanent basis.Equities sales and trading units in France, Germany, U.S. and the U.K. are likely to be scaled back, according to people familiar with the matter, who asked not to be identified as the details are private. HSBC’s Asian equities operation isn’t affected by the review, the people said.The lender, which makes the bulk of its earnings in the Greater China region, is embarking on the cuts as part of broader plans to reduce its headcount by thousands across different businesses. It also joins European firms including Deutsche Bank AG in pulling back from equities. Chairman Mark Tucker is pushing for HSBC to take more radical action on costs, and installed Quinn in August after ousting John Flint as chief executive officer.About 45 jobs may be cut in New York, said one of the people. HSBC in London declined to comment. The U.K.’s Sunday Times newspaper reported last weekend that HSBC was reviewing its global equity sales and trading operations.Shares of the bank rose 1.3% at 11 a.m. in London trading. They’re still down more than 5% for the year.HSBC’s Caretaker CEO Sets Sights on Getting the Job for GoodHSBC’s global equities unit last year posted revenue of $1.2 billion, down $76 million from 2017. That’s dwarfed by the $5.3 billion of income in its fixed income, currencies and commodities division. The bank does not break out the profitability of the individual businesses.Equities sits inside HSBC’s global banking and markets business, which has seen cuts across several divisions. GBM houses the lender’s corporate finance and trading operations, employing about 24,000 of the division’s total workforce of 48,500, which includes contractors and other support staff.Revenue at GBM fell 3% in the first half amid historically low volatility and spread compression in foreign exchange and equities, the bank said in its interim results.HSBC’s other operations in France are in focus as Quinn shrinks the bank. People familiar with the matter have previously said that the French retail bank will be put up for sale, which could take as many as 8,000 employees off the lender’s payroll.(Adds shares, background from fifth paragraph.)To contact the reporters on this story: Harry Wilson in London at hwilson57@bloomberg.net;Stefania Spezzati in London at sspezzati@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Keith Campbell, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
HSBC France says plans to move out of Champs-Elysees HQ
- Reuters - UK Focus
UPDATE 1-Emirate of Sharjah to raise $750 mln in sukuk
- Reuters - UK Focus
Hong Kong banks to rollout support measure to small businesses - central bank
Nine major banks in Hong Kong have agreed to adopt a number of measures to support small and medium enterprises in Hong Kong, the central bank said on Wednesday, as four months of anti-government protests start taking its toll on local businesses. The Hong Kong Monetary Authority (HKMA), the city's central bank, announced the measures after meeting the nine banks, which it did not name, under the newly established "Banking Sector SME Lending Coordination Mechanism". Hong Kong's largest banks include HSBC, Bank of China (Hong Kong) and Standard Chartered.
- Reuters
HSBC France to leave its Champs Elysees headquarters
PARIS/LONDON (Reuters) - HSBC France said on Wednesday its teams will leave a prestigious headquarters on Paris' Champs Elysees avenue by 2020 in an emblematic move ahead of the planned sale of its retail business in the country. The exit and planned sale, following a strategic review of the group's French retail activities, are part of a broader cost-cutting effort under interim Chief Executive Noel Quinn. "HSBC France has a project of moving its headquarters by 2020 to 38 av Kleber, 500 meters away from its actual headquarters that was sold in 2010," the bank said in a statement.
- Fool.co.uk
Here’s why I think you can retire on the HSBC share price
With its international operations and track record of returning cash to investors, the HSBC share price could pay you for life, says Rupert Hargreaves.
- Reuters - UK Focus
U.S. House passes legislation taking hard line on China over Hong Kong, Huawei
The U.S. House of Representatives on Tuesday passed four pieces of legislation taking a hard line on China, three related to pro-democracy protests in Hong Kong and one commending Canada's government in a dispute over the extradition of an executive from Huawei Technologies. All four measures passed by unanimous voice vote, as members of Congress - Democrats and Republicans - said they wanted to take an aggressive stance on China and show support for Hong Kong following four months of unrest in the city. One of the measures, the Hong Kong Human Rights and Democracy Act, would require the U.S. secretary of state to certify every year that Hong Kong was retaining its autonomy in order to keep receiving the special treatment that has allowed it to be a major financial center.
- Reuters
HSBC taps Lazard to sell French retail business: source
HSBC Holdings has hired U.S. investment bank Lazard Ltd to sell its French retail business, a source close to the matter told Reuters, as part of a plan by new interim chief executive Noel Quinn to reduce costs across the banking group. HSBC , Europe's biggest bank by assets, has carried out a strategic review of the French retail business, which has around 270 branches and employs up to 3,000 staff out of 8,000 in France overall. Lazard declined to comment.
- Reuters
HSBC taps Lazard to sell French retail business - source
HSBC Holdings has hired U.S. investment bank Lazard Ltd to sell its French retail business, a source close to the matter told Reuters, as part of a plan by new interim chief executive Noel Quinn to reduce costs across the banking group. HSBC , Europe's biggest bank by assets, has carried out a strategic review of the French retail business, which has around 270 branches and employs up to 3,000 staff out of 8,000 in France overall. Lazard declined to comment.
- Reuters - UK Focus
Trade wars pose "worrisome" threat to world economy: BoE's Kohn
The escalation of trade conflict between the United States and China is "very worrisome" for the global outlook and it remains to be seen if it will tip the world economy into recession, Bank of England policymaker Donald Kohn said on Tuesday. "Whether that is strong enough to put the whole world into recession or not, who knows, but it's bad," said Kohn, a former vice chairman of the Federal Reserve System. "There are several dimensions in which I think this breaking, this beginning of fragmentation of the global trading system is very worrisome," he told a panel of British lawmakers.
- Fool.co.uk
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- Reuters - UK Focus
LIVE MARKETS-Diverging fortunes in luxury
* Optimism on Brexit and the trade war drive stocks higher * STOXX up 1.7%, Irish stocks jump 3.7% outperforming rest of Europe * Publicis sinks after results, drags WPP down * Hugo Boss shares slump 11%, pulling down Burberry Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net DIVERGING FORTUNES IN LUXURY (1256 GMT) Hugo Boss shares dropped more than 13% today hitting their lowest since December 2010 after the company's latest sales warning. The two companies highlight the polarisation in the luxury space, with some companies investing heavily on marketing and product design, while others, which lack the same firepower, struggling to compete, says Aneta Wynimko, a portfolio manager at Fidelity International, who leads a $1.3bn global equities consumer fund.
- Reuters - UK Focus
LIVE MARKETS-Milestones galore as Johnson's Brexit bus appears on course
* Optimism on Brexit and the trade war drive stocks higher * STOXX up 1.7%, Irish stocks jump 4% outperforming rest of Europe * Publicis sinks after results, drags WPP down * Hugo Boss shares slump 11%, pulling down Burberry Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net MILESTONES GALORE AS JOHNSON'S BREXIT BUS APPEARS ON COURSE (1244 GMT) Banks, retailers, housebuilders... oh wait it's easy this way, 85% of the constituents in the FTSE midcap index are rallying! And in the rest of Europe, DAX is indeed having its Oktoberfest rising 2%. ** The FTSE 250 index is poised for its best single-day gain in more than 3 years.
- Bloomberg
High-Yield Savings Accounts Feel the Fed’s Squeeze
(Bloomberg Opinion) -- Before the financial crisis, the term “high-yield savings account” would have been considered an oxymoron.Today, such products are thriving. After the Federal Reserve dropped its benchmark lending rate to near-zero in late 2008, big U.S. banks paid virtually nothing to anyone who parked money with them. That presented an opportunity for new, mostly online entrants to swoop in and offer much more. After years of getting zero, customers viewed a 2% interest rate with backing from the Federal Deposit Insurance Corp. as a bonafide steal.Their popularity only grew as the Fed raised interest rates. Even Goldman Sachs Group Inc. got into the game in 2016 with its consumer bank under the brand Marcus. Higher yields fueled the online cottage industry that tracked the best interest rates available each month. A quick search of “best savings account” includes articles updated monthly from NerdWallet, Bankrate, the Balance, SmartAsset and LendingTree’s MagnifyMoney, among others. Fast-forward to the present. With the Fed having cut interest rates twice since the end of July, and possibly lowering them again this month, it’s hardly surprising that these savings accounts have adjusted lower as well. Yet it’s almost comically difficult to find how the various savings rates have changed over time because the entire online ecosystem updates so frequently. One of my editors told me the rate on his Marcus account fell to 1.9% on Oct. 4, the third time that’s happened since he opened it in March. Fortunately, Greg McBride, chief financial analyst at Bankrate.com, sent over some historical data:Clearly, no two banks reacted to the change in Fed trajectory quite the same way. Goldman Sachs’s Marcus and Barclays Plc, for example, clearly anticipated interest-rate cuts and gradually lowered their savings rates ahead of the central bank’s announcements. Ally Financial Inc., by contrast, slashed its rate by 30 basis points in the week after the Fed’s July rate cut. Colorado Federal Savings has only had to drop its promised interest rate once since March because it remained comfortably below the fed funds rate. And then there’s HSBC Holdings Plc’s HSBC Direct, which stubbornly kept its rate elevated until this week, when it made a 25-basis-point reduction.At this point, regardless of the past several months, each bank is running out of room to maneuver after the Fed’s persistent rate cuts. Barclays, as of the most recent Bankrate data available, is offering just 2 basis points less than the upper bound of the fed funds target rate. Marcus was in a similar bind for a couple of weeks but swiftly lowered its rate by an additional 10 basis points. HSBC, for now, seems determined to offer higher rates than the competition, though by a shrinking margin.For those not steeped in financial markets and listening to every word from Fed speakers, it sure might seem like “high-yield savings accounts” aren’t living up to the hype. Round numbers might be purely psychological, but it’d be hard to fault people who balk at interest rates dropping below 2%. Nerdwallet’s Q&A section asks: “What do the best savings accounts look like?” Its answer: “The best savings account interest rates are close to 2.00% or higher.”Obviously, the terms of these savings accounts allow for changes to interest rates at any time. With 10-year Treasury yields at 1.66%, it’s simply not sustainable for banks, even those without brick-and-mortar locations, to offer the same payouts they once did. Some institutions that require high minimum opening balances still offer juicy rates, like 2.4% at Popular Inc.’s Popular Direct, but those seem destined to fall eventually.To be sure, it could be a lot worse for American savers. In Europe, a growing number of German banks are passing on the region’s negative interest rates to their customers as costs become too high to bear. Bigger lenders like Deutsche Bank AG and Commerzbank AG have signaled they’re warming to the idea as well.All of this serves as a backdrop for the Fed’s interest-rate decision on Oct. 30. Wall Street is convinced that after a wave of weak economic data, the Fed will lower rates yet again, even though Chair Jerome Powell has insisted the central bank is not on a preset course and minutes from the central bank’s September meeting revealed that policy makers are sharply divided about the path forward. While Chicago Fed President Charles Evans said he “wouldn’t mind another cut,” notable hawks Kansas City Fed President Esther George and Boston Fed President Eric Rosengren said further lowering the fed funds rate isn’t justified yet because consumer spending, which accounts for 70% of the U.S. economy, remains so strong.If the post-crisis era has taught markets and economists anything, it might just be that lower-for-longer interest rates don’t necessarily get people to raid their savings and spend. Rather, it might be just the opposite — without any hope of earning anything on what they save, consumers may decide to hoard additional cash for a rainy day or to meet their retirement goals. Since mid-2005, the U.S. personal savings rate as a percentage of disposable income has generally trended higher, to about 8% from as low as 2.2%, according to Commerce Department data.Given that U.S. consumers appear to be one of the few bright spots in an otherwise slowing global economy, the Fed should be careful not to make any moves that would slow their momentum. Certainly, one more quarter-point rate cut isn’t going to suddenly break Main Street. According to the latest data from the FDIC, retail deposits at the nine largest institutions increased by more than 2% from a year earlier, to $5.2 trillion, even though more than one-fourth of deposits pay no interest. In other words, many patrons of big banks have become accustomed to getting paid nothing on their checking or savings account balances.And yet, if enough savvy savers become convinced that the Fed will abandon its projections and drop interest rates at just about every meeting, it’s easy to envision a scenario in which money that would have gone into high-yield savings accounts instead gravitates toward fixed-rate bonds or certificates of deposit to lock in a reliable stream of income. That sets up an additional hurdle for those consumers to access their cash and spend to keep the economy afloat.Powell has long said that the central bank will act as appropriate to sustain the economic expansion. Lately, that’s meant cutting interest rates at every turn, to the delight of stock markets. But the Fed would do well to spare a thought for savers as well. It’s easier to spend when it’s clear how much interest your bank account will pay tomorrow.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Johnson to Meet Varadkar in Bid to Break Impasse: Brexit Update
(Bloomberg) -- Follow @Brexit, sign up to our Brexit Bulletin, and tell us your Brexit story. Boris Johnson will meet Irish Prime Minister Leo Varadkar on Thursday as the U.K. and European Union seek a breakthrough in stalled talks to reach a Brexit deal. EU chief negotiator Michel Barnier warned the two sides are in no position to reach an accord, but said that with "goodwill" there’s still the possibility of doing so. Johnson said he is "cautiously optimistic.”Johnson has also scheduled an emergency sitting of Parliament for Oct. 19, the day after he returns from a summit of EU leaders in Brussels. The crisis session will give MPs the chance to debate the way forward. A rare Saturday session in the House of Commons, it’s set to be fraught as politicians weigh their options: delaying Brexit, crashing out with no deal, or trying to bring down the government.Key Developments:Johnson and Varadkar to Meet in northwest England on ThursdayParliament to sit on Saturday Oct. 19 after crunch EU summit. Parliament has only met four times on a Saturday since 1939.Brexit Secretary Stephen Barclay to hold talks with EU Chief Negotiator Michel Barnier on ThursdayBarnier: a deal is “very difficult, but possible”Johnson’s DUP allies reject mooted European compromise plan for Irish borderBrexit Talks Go On Hold as Leaders Focus on Pinning BlameJohnson Says He’s ‘Cautiously Optimistic’ (5:45 p.m.)Boris Johnson posted a campaign video on Twitter summing up his week so far, including announcements on hospitals and police, a reference to Extinction Rebellion protests in London and -- inevitably -- a reference to Brexit."We’ve been also negotiating with our friends and partners in the EU about Brexit,” Johnson said. “I’m still cautiously, cautiously optimistic."U.K. Banks to Help Companies With Brexit Loans (5:25 p.m.)U.K.’s banks signed up to a government-backed program designed to ensure small and medium-sized companies have access to the cash they need to prepare for Brexit.The government’s British Business Bank will make 1.3 billion pounds ($1.6 billion) available to lenders to enable them to help SMEs invest in capital, increase export capabilities and manage cash flow, the Business Department said in an emailed statement.The program was finalized at a meeting of the government’s Business Finance Council, co-chaired by Business Secretary Andrea Leadsom and Economic Secretary to the Treasury John Glen. Banks signed up include Barclays, HSBC, Royal Bank of Scotland, Lloyds and Santander.Johnson and Varadkar to Meet On Thursday (5:05 p.m.)The British and Irish leaders will meet over lunchtime on Thursday for what looks likely to be a make-or-break conversation for the chances of getting a Brexit deal by the Oct. 31 deadline. Boris Johnson is hosting Leo Varadkar in northwestern England for the private talks, along with members of their senior teams, according to statements released by both sides."This will be a private meeting to allow both leaders and their teams to have detailed discussions about the process for securing agreement for a Brexit deal," the Irish government said in a statement.Barnier Aims For Moral High Ground (4:50 p.m.)The EU’s chief Brexit negotiator distanced himself from some of the more inflammatory rhetoric that emerged on Tuesday, saying the bloc would remain “calm, vigilant, constructive and respectful of the United Kingdom and those who govern it.”Michel Barnier told European lawmakers that while the two sides were still far apart, there was the possibility of an agreement -- as long as there’s “goodwill.” But, with negotiations at an impasse, he didn’t show any sign that the EU is ready to give ground.He spelled out some of the more serious issues of disagreement, describing Brexit as “something that’s long-term” and “creating specific serious problems, first and foremost for Ireland.”The biggest area of dispute relates to customs arrangements on the Irish border. Barnier rejected the U.K.’s bid to work those out during a post-Brexit transition period because if that didn’t end up happening it would lead to “no checks whatsoever,” which would damage the EU’s single market.He also criticized the U.K.’s plan to give the Northern Ireland assembly a veto over the deal and the government’s request to remove the so-called level playing field commitments, agreed by Johnson’s predecessor Theresa May -- which would prevent the U.K. undercutting the EU on issues such as taxation, environmental standards and social protection. That was about “a basic sense of fairness and loyalty,” he said.Barnier: No Position at Moment to Get Brexit Deal ( 4:15 p.m.)EU chief Brexit negotiator Michel Barnier told the European Parliament that “time is pressing” to get a Brexit deal, but the sides aren’t in a position to reach an agreement yet.Among disagreements is the issue of customs checks on the Irish border, he says. “We need to have proper rigorous checks all along our external border,” he said.EU’s Juncker Says Don’t Blame EU (4:00 p.m.)EU Commission President Jean-Claude Juncker says he doesn’t “exclude a deal” on Brexit.“We are not accepting this blame game which started in London -- we are not to be blamed,” he told the European Parliament in Brussels.Ireland Holds Out For Brexit Solution (2 p.m.)Ireland needs a solution to the border with Northern Ireland that “can be sustained into the future” after Brexit, Finance Minister Paschal Donohoe said in a Bloomberg TV interview in Dublin. Ireland still requires a deal that preserves “the principles behind the backstop,” he said.Any proposal to seek the consent of Northern Ireland tied must “respect the role” of the two communities of Northern Ireland, Donohoe added. The U.K. plan in its current form could give an effective veto to just one political party in the region.Merkel Not Breaking Code of Silence (1:30 p.m.)Angela Merkel’s chief spokesman, Steffen Seibert, kept getting pressed about the now-famous morning phone call. The U.K. side have given their take on it but Germans are not, but one can try and read between the lines.Here is what he said to reporters in Berlin:“We have no new position on Brexit, neither the chancellor nor the government. This is what we’ve always said. The government will work to find a solution until the last possible moment, so that we can have an orderly U.K. exit out of the EU and avoid the scenario of a no-deal or disorderly exit, because that is the worst-case scenario for all involved.”Asked more pointedly whether the chancellor said what the British press (or Downing Street) said she said: “A private conversation is a private conversation.” He went on to say, again, that Germany’s position hasn’t changed.Barnier: Deal Is ‘Difficult But Possible’ (12:15 p.m.)Michel Barnier, the EU’s chief Brexit negotiator, said a deal with the U.K. is “very difficult but possible” as he prepared to meet with Brexit Secretary Stephen Barclay on Thursday.“The EU will remain calm, vigilant, respectful and constructive. The technical talks continue and I’m invited for working lunch with Steve Barclay tomorrow,” Barnier told reporters on Wednesday. “I think a deal is possible, very difficult but possible.”Irish Backstop Can’t Have time limit, EU Says (12 p.m.)EU Budget Commissioner Guenther Oettinger said he and his European Commission colleagues had discussed Brexit and all agreed the latest British proposal was inadequate. The Irish backstop can’t have a time limit, Oettinger told reporters in Brussels.Boris Johnson Has a Plan B for Brexit If the EU Rejects His DealReported EU Plan Non-Runner, DUP Says (11:35 a.m.)The DUP moved quickly to kill off a reported move by the EU to break the deadlock by giving the Northern Ireland Assembly a say over how long EU customs rules last (see 11:20 a.m.). Brexit spokesman Sammy Wilson said this would allow Sinn Fein keep the region bound to the EU indefinitely.“This is worse than Mrs May’s deal, which at least contained the pretense of these arrangements only being used as an insurance policy,” he said in a statement. “This proposal confirms the intended permanency of keeping Northern Ireland in the EU and removing us from the United Kingdom.”Scottish Court Delays Decision on Extension (11:25 a.m.)Scottish judges held off intervening in the Brexit furor by postponing a decision on whether they need to commit to sending a letter requesting an extension, giving Boris Johnson a temporary legal victory.The judges ruled that Johnson hadn’t acted unlawfully but left the door open to a new case if he fails to reach a deal with the EU and refuses to request an extension by Oct. 19, as he would be required to by law. Under a power peculiar to Scottish law, known as nobile officium, Scottish courts can intervene in any way they see fit to fix an outcome.At the hearing in Edinburgh, Johnson’s lawyers promised he will obey the law and request an extension from the EU, while also arguing that there’s nothing to stop the prime minister continuing to say he intends to leave on Oct. 31.Potential Backstop Offer Floated (11:20 a.m.)The EU may be willing to make a major concession to Boris Johnson over the Irish border by giving the Northern Ireland Assembly a say over how long EU customs rules last in the province, the Times newspaper reported.In an attempt to break the deadlock, the bloc is dangling the prospect of the assembly in Belfast being able to pull Northern Ireland out of the so-called backstop mechanism, aimed at preventing a hard Irish border, but it would need to vote at some point after a few years with a double majority, an EU official said.This would mean it would need to be approved by both nationalist and unionist politicians, something that was immediately rejected by Sammy Wilson, Brexit spokesman for the DUP. Sinn Fein also appeared to reject the idea.It would also need Johnson to agree to keep Northern Ireland in the EU’s customs union until then, and possibly forever, something he’s said he’s not willing to do.The idea is not an official EU position and would need the approval of the Irish government, but officials say it is seen as a potential compromise and that has been made clear to U.K. negotiators. Bloomberg reported last week that the EU was considering offering to time-limit the backstop linked to the assembly’s consent.Barclay and Barnier to Meet on Thursday (11 a.m.)Brexit Secretary Stephen Barclay will travel to Brussels for talks with European Union chief negotiator Michel Barnier on Thursday.The meeting is being seen as a stock-take, rather than an indication of a breakthrough -- or breakdown -- in negotiations, according to British officials.Parliament Set For Emergency Saturday Sitting (Earlier)MPs will sit in emergency session in London on Saturday Oct. 19, just 12 days before Britain is set to leave the EU, the day after a crunch summit of EU leaders in Brussels.If Boris Johnson strikes a deal with the EU, it will be a chance for politicians to vote on it, but if he doesn’t, it could also present an opportunity for the premier to ask Parliament to sanction a no-deal Brexit.Parliament has already passed a law requiring Johnson to ask for an extension to negotiations if no deal is reached by Oct. 19, but he could use the debate as an opportunity to set out ways he plans to get around the so-called Benn Act and deliver on his promise leave the EU on Oct. 31.It will be the first time the House of Commons has met at a weekend since 1982, when MPs debated the Falklands War.Denmark Increases Support for SMEs (Earlier)Just two days after Boris Johnson called Danish Prime Minister Mette Frederiksen to discuss Brexit, the Business Ministry in Copenhagen announced it is spending an extra 50 million kroner ($7.4 million) to help the country’s small and medium-sized companies deal with the fallout from the U.K.’s departure from the EU.“A no-deal Brexit continues to be a high-risk scenario and that’s why we need to step up preparations,” Business Minister Simon Kollerup told reporters. “Denmark will be hit really hard by a no-deal Brexit, especially if we are not prepared enough.”Earlier:Brexit Talks Go On Hold as Leaders Focus on Pinning BlameBanks Warned Over Failure to Move Employees in Time for BrexitBOE Warns U.K. May Face Economic Turmoil in No-Deal Brexit\--With assistance from Morten Buttler, Kitty Donaldson, Patrick Donahue, Anna Edwards, Jonathan Stearns, Rodney Jefferson and Dara Doyle.To contact the reporters on this story: Tim Ross in London at tross54@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net;Alex Morales in London at amorales2@bloomberg.netTo contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Thomas PennyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
Bankers brace for no-deal Brexit markets mayhem 10 days early
Financial markets could go into a Brexit tailspin about 10 days earlier than expected if a potentially chaotic no-deal departure at the end of the month looks inevitable, bankers say. Five banking sources said contingency plans were in place to deal with a possible rout in stocks, bonds and sterling on Oct. 21, rather than immediately after Britain's scheduled departure date of Oct. 31. Senior management of at least two large banks are expected to convene in Brexit "control rooms" to oversee operations and keep regulators abreast of market activity.
- Bloomberg
Where HSBC Goes, Expect Rivals to Follow
(Bloomberg Opinion) -- HSBC Holdings Plc’s interim Chief Executive Officer Noel Quinn is considering going much further than his former boss in cutting fat at the bank. He may triple job reductions announced just two months ago to as much as 6% of the workforce.Sure enough, Quinn may be trying to impress the board and investors to secure the No. 1 position at HSBC on a permanent basis. But his rivals at other financial firms could follow in his footsteps: Fresh revenue pressure and a lingering problem with costs at European banks don’t give many alternatives.HSBC is reportedly questioning why it has so many people in Europe, while it has double-digit returns in parts of Asia, the Financial Times has reported. London-based HSBC may target highly-paid bankers in the latest round of reductions and asset sales that could affect 10,000 roles.It isn’t hard to see why HSBC, Europe’s biggest bank, wants to tighten expenses. The London-based lender, which generated 80% of pretax profit in Asia in the first half, has made China a focus for growth. But the bank’s expansion there is now threatened by the economic slowdown stemming from the China-U.S. trade spat. The deepening unrest in Hong Kong, where it is the biggest bank, will compound the hit to growth.Cutting back in Europe and the Americas, where analysts at Citigroup Inc. say HSBC has a structural profitability problem, seem the right thing to do – just over 30% of its full-time employees are in Europe and North America.But HSBC is not alone in facing challenges in Europe that will give lenders little choice but to accelerate and deepen cost cuts. The 60,000 jobs that have already been earmarked for the chop this year, mostly by European banks, are probably just a taste of things to come. Too many lenders are still far too inefficient.The top 20 European banks have done little to improve their cost-income ratios, which remained largely flat around the 68% to 70% level between 2016 and 2018, according to a Moody’s report from earlier this month. By contrast, their U.S. peers have improved efficiency considerably, lowering their ratios to closer to 62% from about the same starting point in 2014. As a result, Moody’s says banks in Germany, France, Italy and the U.K. lag those in the U.S. in a measure of operating profitability. Those in Germany, the most inefficient EU market, had the lowest score among institutions in the European Union .Even before the European Central Bank’s latest interest rate reduction, the average return on equity was about 6% across the industry, well below the cost of equity, estimated at 8% to 10%, according to Moody’s.It’s no surprise then that the mood at a recent banking conference was so subdued. Analysts at Bank of America Corp., which hosted 50 lenders and investors from Europe, the Middle East and Africa at the end of September, concluded that the outlook for revenue has declined “materially” with little scope for new loan demand. About one-fifth of the event’s participants said there’s nowhere for financial services firm to hide.While some are starting to pass the cost of negative rates on to individuals further down the wealth rankings, large charges to retail clients don’t appear to be on the cards just yet. The potential damage to their franchises is too much of an unknown quantity.The Bank of America analysts concluded that more cost cuts are on the way, though probably not till banks report full-year earnings. Competition in trading and lower rates will continue to hurt French banks, so much so that they said some conference participants expected “major cost saving plans.” UniCredit SpA in Italy is considering as much as 10,000 cuts, while in Germany Deutsche Bank AG and Commerzbank AG have both embarked on fresh plans.Analysts estimate that 2020 earnings per share (excluding one-time charges) should improve by 5.2% on a 1.5% increase in net revenue, according to data compiled by Bloomberg Intelligence. Both of those will probably come down.In signaling now that more pain is needed, HSBC’s Quinn may have shown his mettle, and he’s certainly upping the pressure on rivals.To contact the author of this story: Elisa Martinuzzi at emartinuzzi@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
HSBC Sees Staff Shrinking by Thousands on Cuts, French Sale
(Bloomberg) -- HSBC Holdings Plc is set to reduce its headcount by thousands as Europe’s largest bank looks to sell its French retail business and clamp down on replacing staff who leave.HSBC’s planned sale of its French retail bank could take between 4,000 and 8,000 workers off the lender’s payroll, according to a person familiar with the matter. That, combined with fewer replacements and a group-wide streamlining program, could see the 238,000-strong workforce drop by as many as 10,000, the person said, requesting anonymity to discuss private deliberations. The Financial Times first reported the cuts.The plan drawn up by HSBC’s interim chief executive officer, Noel Quinn, envisages role reductions focused on the European and U.S. operations. The regions have dragged on profitability at a lender that makes most of its money in faster-growing Asian economies. A spokeswoman for HSBC declined to comment.In August, John Flint was ousted as CEO and replaced with Quinn in part because of his failure to get to grips with the bank’s cost base. Quinn, working with Chief Financial Officer Ewen Stevenson, began working on a cost-cutting plan immediately after his appointment, the person familiar with the matter said.Cutbacks were already on the rise after the London-based bank began encouraging managers to look for greater savings through a program known internally as Project Oak. That plan allowed managers to assign expenses incurred eliminating roles from their teams to a central account, rather than having to allocate the cost to their own budgets.Banks across Europe are cutting jobs as they struggle to deal with a combination of low interest rates and sputtering economies. Barclays Plc, Deutsche Bank AG and Societe Generale SA are among those shrinking their workforces.HSBC was relatively insulated from these pressures due to its outsized exposure to Asia. The bank earns almost 75% of its pretax profit in the so-called Greater China region, in particular through its dominance of the Hong Kong banking market. Protests in Hong Kong have hit the local economy, raising concerns about the impact they will have on the territory’s largest lender.The bank was founded in 1865 in the former British colony as the Hong Kong and Shanghai Banking Corp. It has expanded to become one of the world’s largest financial institutions, with operations in 65 countries serving more than 40 million customers.Shares in HSBC fell in early trading in London but later recovered. By 2:08 p.m. the stock was trading at 604.6 pence, up 0.5% for the day.(Updates French job figure in second paragraph and share price in final paragraph.)To contact the reporter on this story: Harry Wilson in London at hwilson57@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Vernon WesselsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Fool.co.uk
What will the latest cost-cutting drive mean for the HSBC share price?
With up to 10,000 jobs at risk, what could this latest move mean for HSBC shares?
- Reuters - UK Focus
Ex-divs to take 9.5 points off FTSE 100 on Oct 10
