Feb 18, 2020

HSBC to cut costs and shed assets in radical overhaul

HSBC said it expected the overhaul - the bank's most radical since it narrowly survived a money-laundering scandal in Mexico in 2012 - to cost it around $6bn in restructuring costs and $1.2bn of costs related to disposals, the majority of which will fall this year and next. HSBC said on Tuesday it would reduce the size of its investment bank by reducing the amount of assets adjusted for risk by around 35 per cent in Europe and 45 per cent in the US. It added it would redeploy the capital tied up in these businesses in higher-growth areas. In the US, where the bank has generated subpar returns for years, HSBC said it would "Reposition" itself by slashing the size of its retail branch network by almost one-third, moving fixed-income trading to London, and reducing operating costs by 10 to 15 per cent. António Simões, who heads the private bank, is leaving HSBC as a result of the changes, making him the highest-profile casualty of the restructuring so far. The bank unveiled the overhaul as it reported a pre-tax loss of $3.9bn for the fourth quarter, after taking a $7.3bn writedown on the value of its investment and commercial banks in Europe, which it blamed on "Lower long-term economic growth rate assumptions."

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