Retail banking: HSBC scales back retail banking
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Retail banking: HSBC scales back retail banking

Operations in 39 countries under review; Bank must be wary about abandoning its command-and-control culture

HSBC chief executive Stuart Gulliver

"The reasons for holding our stock in a crisis become less relevant in recovery and, in our view, we now risk losing ground to more agile competitors"

Stuart Gulliver, HSBC

Last month HSBC outlined ambitious plans to boost its lacklustre return on equity by sharply cutting costs, exiting some non-core retail banking businesses and allocating capital in a much more disciplined way than in the past to remaining businesses. The bank’s new senior management team, led by chief executive Stuart Gulliver, invited analysts and investors to listen to a whole day of presentations from the executives running HSBC’s most important businesses and geographies on how they will achieve $2.5 billion to $3.5 billion of annual cost savings, reduce the cost-income ratio from 55% to between 48% and 52%, and boost returns on equity from the 9.5% achieved in 2010 up to between 12% and 15%.

HSBC had a good credit crisis, thanks to the abundant funding husbanded through a conservative advances-to-deposits ratio of about 80% and similarly conservative capital ratios. It remained sufficiently profitable throughout the calamities that beset the developed-world banking system from 2007 to have paid out $31 billion in dividends over the past four years, a total surpassed only by China’s ICBC.

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