UNITED KINGDOM: HSBC has indicated a ‘pivot to Asia’, with plans to invest around $6 billion in the Asian region. The British multinational company has singled out Asian markets such as Singapore, China, and Hong Kong while targeting wealth management and commercial banking to drive ‘double-digit growth’.
During its result announcement, HSBC said that it would resume paying a dividend of $0.15 a share in cash. Due to the COVID-19 crisis, HSBC reported a 34% drop in profits for 2020. Hence, HSBC decided to update its strategy. As per the reports, Asia already gives a massive amount of revenue to HSBC.
HSBC CEO Noel Quinn said that with regards to Asia, the bank had a ‘solid financial performance in the context of the pandemic,’ which indicates firm foundations for their future growth.
The Hong-Kong founded bank is taking one of the banking industry’s most drastic steps in response to the pandemic – cost-cutting that will reduce its workforce by about 35,000.
HSBC has a 150-branch network in the US and has already shut down 80 branches in the last year. Analysts had expected HSBC to soon scale back its US retail banking operations. However, the bank said it is exploring ‘organic and inorganic options’ for its American retail banking franchise.
South Asia: The target market
Last month HSBC chairman Mark Tucker told the Asian Financial Forum conference that they see real opportunities in expansion across South Asia. Hong Kong-based Bruce Pang, head of macro and strategy research at China Renaissance Securities told BBC that although the economic backdrop is uncertain, Asia – especially China can be the primary engine and vital stabilizer of the global economy. He added that a strategic shift to the region may be welcomed and favored by markets.
HSBC has been gradually shifting its focus towards Asia, but the transition has not been an easy one.
In September, HSBC came under the lens for an endorsement of a controversial national security law that China has imposed on Hong Kong.
Earlier this month, HSBC’s stance of closing the accounts of pro-democratic activists was severely condemned by British MPs and US politicians.
HSBC was founded in 1865 as the Hongkong and Shanghai Banking Corporation. It moved its base to London in 1993 after buying Midland Bank in the run-up to the colony’s 1997 return to China.