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HSBC is reviewing its retail banking operations outside the UK and Hong Kong and could significantly reduce operations in countries such as Mexico in a bid to further cut costs.
The bank is considering locations outside its core markets where it can reduce its consumer presence and focus on more affluent “premium” customers, people familiar with the discussions said.
One of the markets being considered is Mexico, which HSBC entered more than 20 years ago but was slapped with $2 billion by U.S. authorities in 2012 for failures that allowed drug cartels to launder hundreds of millions of dollars. It has a difficult history, including being fined more than of dollars.
Douglas Flint, then HSBC chairman, said the bank:
He said the board “humbly” takes full responsibility for the failure.
Since then, HSBC, which entered Mexico with the acquisition of Grupo Financiero Vital in 2002, has grown its Mexican deposits to nearly $30 billion, making it the bank’s ninth largest market and operating costs of $18 billion. billion dollars.
“It comes down to the size of the consumer business in Mexico,” said one of the people familiar with the study. “You’re trying to thin out the retail layer and focus on top-tier customers who also have wealth. In Mexico, HSBC doesn’t have the scale to be competitive.”
Although no decision has been made yet, the exit is the latest sign of downsizing for the bank, which embarked on a global expansion in the early 2000s and has since refocused its core and high-net-worth businesses in Hong Kong and the UK. It will be.
HSBC sold its Canadian operations to Royal Bank of Canada for $10 billion two years ago and also exited loss-making consumer businesses in France and the United States.
The bank is not considering leaving Mexico completely, but will consider significantly reducing its presence in retail, where it has struggled to compete with larger rivals such as BBVA and Citigroup Inc.’s Banamex. It’s planned.
HSBC is also reviewing its position in countries such as Malaysia and Indonesia, where management believes it would benefit from focusing on premier banking rather than mass-market customers.
HSBC’s new CEO, Georges Erhederi, who took over in September, is keen to streamline banking operations and reduce costs, focusing not only on wealth management but also on the bank’s “premier” category of customers. One of the people involved said. .
Bank executives are working toward a goal of saving up to $500 million a year from previously announced layoffs, two people familiar with the matter said, warning that the figure could change. did.
Recent departures include Nuno Matos, who ran HSBC’s wealth and personal banking business; Annabel Spring, the bank’s head of global private banking and wealth; and Annabel Spring, head of group sustainability. This includes a certain Celine Hellweyer.
Mr. Elhederi also consolidated overlapping senior roles in Commercial Banking and Global Banking and Markets as part of a broader review of the bank’s operations.
He also plans to eliminate the title “general manager,” which gives some of the bank’s most senior executives higher status and better perks.
HSBC’s main international rival, Citigroup, is also pulling back from its nascent global expansion and exiting its consumer business in Mexico.
HSBC declined to comment.
