HSBC: In search of acceptable
Third-quarter earnings show it is time for decisive action.
The ousting of John Flint as HSBC’s chief executive in August was always likely to presage a more intense focus on the performance of the firm’s global banking and markets division.
And, so it has proved with the release of the bank’s third-quarter earnings, in which interim CEO Noel Quinn described the performance of parts of GBM as “unacceptable” and unlikely to improve without “decisive action”.
GBM has long been a thorny problem for the bank, not because it has performed universally badly – it hasn’t, and Asia continues to be a strong area for the firm. But for years the broader franchise has failed to live up to the potential that a bank with the geographic reach and product scope of HSBC should have been able to achieve.
The decisive action? The detail will come when the bank reports full-year earnings: CFO Ewen Stevenson concedes that management was, for now, being deliberately vague.
Reduce but retain
But first, the bank will be reducing the capital allocated to the lowest returning of its US and continental European businesses, although it stresses that it would retain a global presence.