LONDON: HSBC is reviewing a possible exit from as many as 1 in 5 of the countries the lender operates in to sharpen its focus on Asian expansion, Chief Financial Officer Georges Elhedery told Reuters in his first interview since taking the role.
These reviews, which could see the British bank deciding to sell or streamline businesses in 12 countries, follow pressure from Chinese shareholder Ping An Insurance, which wants HSBC to prioritise growth in its money-spinning Asian business which generates 78% of group profit.
“Some of these will have slower progress than others, and none of them is material enough on its own to change the profile of the overall business, but as we progress through and execute on these assessments, we do expect them to contribute towards that shift to Asia,” Elhedery said, declining to disclose which markets were under review or the time frame for the processes.
HSBC’s ongoing pivot to Asia has already triggered planned sales of all or parts of its businesses in France, Greece, Russia and Canada, announced in the last two years.
While the markets under review may be relatively small, the move is significant in showing the pressure HSBC faces to shrink its once globe-spanning local banking businesses in order to lift returns and appease its investors.
HSBC does not break out the results of every individual country in which it operates in its overall results, making identifying underperforming markets challenging.
But its businesses in Europe and Latin America may be particularly under the microscope, with the former region making a net loss in 2022 thanks to restructuring and the costs booked to its headquarters in the region.
Latin America contributed just under 5% of group profit.
One country not currently under review is Mexico, Elhedery said, despite debate among analysts and investors on the bank’s future presence in the country.
“Mexico is performing very well for us,” the veteran banker said, pointing to the US-Mexico-Canada trade agreement and to the China Plus One strategy, which have supported economic growth in Mexico.
“Some 70% of client acquisition in the retail business is through employees of the multinational companies that HSBC banks in Mexico, so there are strong synergies with the wholesale business and the package as a whole makes sense for us,” he added.
Ping An was the only major HSBC investor backing proposals to force the bank to publish regular assessments on the merits of dividing its franchise along Asian and Western lines at HSBC’s annual shareholder meeting on May 5.
A spokesperson for Ping An said the company had no further comment.
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