Too big to succeed? Investors want 'radical surgery' at HSBC

Tue Jun 2, 2015 11:49am EDT
 
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By Sinead Cruise and Steve Slater

LONDON (Reuters) - No longer feared as "too big to fail", shareholders are weighing whether HSBC is now "too big to succeed", and want to know next week how the bank's bosses propose to increase profitability at a sprawling group beset by huge costs.

Investors believe CEO Stuart Gulliver and Chairman Douglas Flint need to announce bold moves to restore the London-based bank's flagging fortunes at a strategy day on June 9.

While shareholders accept not all their concerns will be answered at the meeting, they say no action can be too big to

debate, including a break-up of Europe's largest lender.

"This investor day is potentially a very significant event," said Chris White, head of UK equities at Premier Asset Management, which owns HSBC stock. "The world has moved against them and HSBC has to try to react to that. That is why we could end up seeing some quite radical surgery here."

HSBC largely had a less troubled global crisis than its peers, some of which were bailed out by governments fearing they could drag down the financial system due to their great size.

It needed no such help, partly thanks to its extensive global business which offset heavy losses in the United States and Europe. But it is the expense and difficulty of maintaining this global reach that is now worrying investors.

Tougher banking regulation imposed since the 2008-09 crisis has hurt HSBC deeply. Watchdogs have exposed weak supervisory links between some far-flung operations and the London central command of what once called itself "the world's local bank" to advertise its expertise in a wide range of countries.   Continued...

 
A Swiss International aircraft flies past the HSBC headquarters building in the Canary Wharf financial district in east London February 15, 2015.  REUTERS/Peter Nicholls