HSBC's investment bank to shed clients, assets in profitability push

Wed Jun 10, 2015 12:36pm EDT
 
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By Steve Slater

LONDON (Reuters) - HSBC's (HSBA.L: Quote) investment bank could shed more than a fifth of its clients and plans to reduce its credit and interest rates businesses by $100 billion over the next two years in its bid to improve profitability.

Under a strategic shift announced on Tuesday, HSBC said it will reduce the assets at its investment bank by a third, or $140 billion, which will reduce the significance of the business to Europe's biggest bank.

HSBC said its investment bank, known as global banking and markets (GBM), will sell $40 billion of legacy credit positions, cut assets at its rates and markets division by $60 billion and reduce low returning loans by $40 billion, according to a presentation.

Up to $100 billion of the assets being cut are held in Europe, mostly in Britain and France, said Samir Assaf, chief executive of GBM.

GBM said it had shed 275 clients since 2011 and was in the process of getting rid of another 700, or more than 20 percent of its roughly 4,000 main client groups.

"We are working on clients that have low profitability or low return for capital use," Assaf told investors and analysts at the presentation, saying GBM was also deciding whether to keep another 250 clients.

The aim is to reduce the size of GBM, cap its costs and improve its profitability.

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A man leaves a HSBC bank branch in Rio de Janeiro, Brazil, June 9, 2015. REUTERS/Sergio Moraes