Niall Booker, Chief Executive of HSBC’s North American operations, today outlined a strategy to “rebuild the US business.” How that will impact the bank’s 5,000 WNY employees and its drawn out office space search is unclear. Booker spoke at HSBC’s Strategy Day event webcast to a global audience. Across its international operations, the bank is seeking to cut costs by $2.5 billion to $3.5 billion by 2013.
HSBC’s North American business remained profitable in the first quarter, however profits were 60 percent lower overall. Total revenues were 14 percent lower in part driven by declining lending balances in its credit cards business and Consumer Finance run-off portfolios. According to Booker, the bank’s North American operations have a record of underperformance against Group target returns on equity.
From Bloomberg News:
“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,” [HSBC CEO Stuart] Gulliver said. “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.”
It is “inevitable” that HSBC will employ fewer people by 2013, Gulliver told journalists today.
Booker said that HSBC will be examining its North American branch network and continue to reduce its mortgage portfolio and shrink or sell its credit card operation. HSBC has 474 U.S. branches, 78 percent are in New York State, and 51 in Manhattan. New York City will remain as the hub for the Americas and Miami as the hub and gateway to Latin America.
Booker said the plan is to “right-size the branch network to concentrate on areas with strong international connectivity.”
It will also refocus in strategic, profitable businesses and markets and establish a lean and sustainable support infrastructure. HSBC expects to reduce 50 to 60 percent of its mortgage portfolio over next five years to free up capital and will streamline its information technology operations to increase efficiencies and consolidate its footprint. Booker said the company is just beginning its review of North American operations and could not detail specific cuts that may be forthcoming.