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Introduction

HSBC Holdings plc is a British multinational banking and financial services company
headquartered in London, United Kingdom. It is the world's third largest bank by
assets. It was established in its present form in London in 1991 by the Hongkong
and Shanghai Banking Corporation Limited to act as a new group holding company.
[5][6] The origins of the bank mainly lies in Hong Kong, and also to a lesser extent
Shanghai, where branches were first opened in 1865.[1] The HSBC name is derived
from the initials of the Hongkong and Shanghai Banking Corporation.[7] The
company was first formally incorporated in 1866. The company continues to see
both the United Kingdom and Hong Kong as its "home markets".[8]
HSBC has around 6,600 offices in 80 countries and territories across Africa, Asia,
Europe, North America and South America, and around 60 million customers.[9] As
of 2012, it was the world's largest bank in terms of assets and sixth-largest public
company, according to a composite measure by Forbes magazine.[10]
HSBC is organised within four business groups: Commercial Banking; Global
Banking and Markets (investment banking); Retail Banking and Wealth
Management; and Global Private Banking.[11]

HSBC Commercial Banking


Hong Kong Small Business Hot Issues Survey
May 2015

'the world's local bank'

HSBC FINACIALS

HSBA income statement

Period
Ending:

Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Total
Revenue(in B)

83.62

87.39

92.54

102.95

Net Income(in
B)

13.69

16.20

14.03

16.80

For the three months ended 31 March 2015, HSBC Holdings plc interest
income decreased 5% to $8.27B. Net interest income after loan loss provision
decreased 3% to $7.7B. Net income increased 1% to $5.26B. Net interest
income after loan loss provision reflects decrease in interest earning assets
and increase in interest bearing liabilities

Cash Flow statement

Period Ending:

Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Cash From
Operating Activities

-21372

44977

-9156

79762

Cash From
Investing Activities

-4961

-6585

5653

-9931

Cash From
Financing Activities

-1868

-6981

-8232

-10086

Net Change in Cash

-44980

30973

-10141

51373

http://www.investing.com/equities/hsbc-holdings-financial-summary

Restructuring of HSBC
Problems:
world's third largest bank by assets
Need for digitization & self use

Restructuring HSBC
Since 2011, we have materially transformed our business in line with our strategy.
Important actions to be completed by 2017:
Reduce risk-weighted assets across the Group by 25 per cent i.e. by $290 billion by
2017 and reinvest the capital in higher-performing businesses.
Leverage our international network and strategic opportunity in the area covered
by the North American Free Trade Agreement (NAFTA) to rebuild profitability in
Mexico and deliver satisfactory returns in the US.
Set up a UK ring-fenced bank which will account for about two thirds of UK
revenues, or $11 billion, and will have some 26,000 staff, or 57 per cent of the total
in the United Kingdom.
Make USD4.5-5.0 billion in cost savings
Capture growth opportunities in Asia including in Chinas Pearl River Delta, in the
Association of Southeast Asian Nations (ASEAN), and in our Asset Management and
Insurance businesses
Grow business from our global leadership position in the internationalization of the
Chinese currency, the RMB.
Complete a review of the location of the HSBC Group headquarters by the end of
2015.

Reduction in Group RWAs


Reduce risk-weighted assets across the Group by 25
per cent i.e. by $290 billion by 2017 and reinvest the
capital in higher-performing businesses. That will
include a reduction of a third, or $140 billion, in global
banking and markets (GBM), its investment bank.
That means GBM will account for less than a third of
HSBC's balance sheet, down from 40 per cent now.
The cuts provide significant headroom for the group
to fund asset growth in Asia and absorb RWA inflation,
whilst protecting its ability to pay a progressive
dividend.

Optimization of Global Network


One of the biggest competitive advantages HSBC enjoys
over other global bankinggiants is the extent of its
geographical diversification. But the complexity arising
from the extensive global network has been a cause for
concern since the economic downturn of 2008 especially
since it has not been accretive tothe banks returns. This is
why the bank shrunk its global presence from 87 countries
in 2011 to 73 at the end of 2014. HSBC intends to continue
to exit low-profit regions over coming years, beginning with
Brazil and Turkey.The banks grossoutstanding loan
portfolio at the end of 2014 was $25.5 billion in Brazil and
slightly less than $8.6 billion in Turkey.

Improve Profitability In Mexico and the U.S


HSBC intends to strengthen its position in Mexico so
that it can leverage the countrys economic growth.
Mexicos attractiveness comes from its export-focused
economyas well as from its being a part of the NAFTA
(North American Free Trade Agreement) with the U.S.
and Canada. HSBC is currently the fifth largest bank in
Mexico, and has a sizable share of the nations trade,
equity underwriting and debt origination markets. Over
the next two years, the bank will look to improve
operating efficiency in Mexico to boost pre-tax incomes
from less than $100 million now to more than $600
million by the end of 2017.

Prioritize Growth In Asia


The importance of HSBCs operations to its business model
becomes quite clear from the fact that the region contributed
around 64% of the banking groups total pre-tax incomes for
2014 (as adjusted). Notably, this represents a sharp increase
from the regions 33% shareofthe pre-tax income in 2004.
The bank expects this figure to grow considerably, based on
estimates that Asia will contribute nearly50% of the worlds
total banking revenue pool by 2025 up from 30% in 2010.
HSBC is particularly interested in growing its business in the
Pearl River Delta region of China and the ASEAN-affiliated
nations of Malaysia, Singapore and Indonesia. This is likely to
have a tangible impact in the rate of growth of HSBCs loan
portfolio in the region over coming years.

Restructuring

Cut Annual Recurring Costs By $4.5-5 Billion


HSBCs profitability goals hinge on its ability to cut annual recurring
costs by up to $5 billion over the next two years. The savings will
be achieved through six actionable items, and the bank will spend
between $4-4.5 billion to be able to realize these benefits.
The plan involves:
Enhancing digital capabilities, reducing administrative roles
andcutting down the number and size of branches.
Streamlining and automating operations, and also shifting operating
roles to low-cost locations
Simplifying the software development process and optimizing the IT
infrastructure
Moving finance as well as risk-related roles out of high-cost regions
Reducing external spending by consolidating suppliers
Simplifying organizational structure and removing dual reporting
lines

HSBCs exit plan from Brazil and Turkey?


In 2014 the bank generated $791 million in revenue in
Turkey, where it has 300 branches, but still registered a
net loss of $155 million.
In Brazil, where the bank has 850 branches, the net loss
was $247 million, in spite of $4.8 billion in revenue.
He blamed the banks weak performance on those four
troublesome countries along with the UK, which had
been plagued by fines and compensation costs. The bank
said it had incurred $11.2bn of regulatory charges in the
last four years, about $5.7bn of which are related to the
mis-selling of payment protection insurance. The number
of staff working in compliance has more than doubled,
from 3,200 to 7,200.

Job cut details &


announcement
How it would be done
How it affects organization
Increased pressure from share
holders

sustainability

(Allay tensions)

Steady growth for employees (remaining) :


no cut in increment and incentives programme.

Following competitor trend.

Compensation:
3 months notice pay + all other statutory
compensations like epf, gratuity, etc.

Be a part of growth:

Ring-Fence U.K. Operations


HSBC is required to ring-fence its retail banking operations from the
riskier investment banking operations in the U.K. as a part of the
directive issued by the British government to the countrys largest banks
in 2012. The ring-fencing needs to be in place by 2019, and will see HSBC
set-up a separate banking entity based out of Birmingham to house its
retail, private and commercial banking units in the U.K. The remaining
units will remain under the current London-based subsidiary. The process
of ring-fencing and the associated funding requirements for the two
separate banking subsidiaries will result in an increase in operating
expenses for HSBCs European operations in the future. Also, the bank is
currently reviewing the possibility of moving its headquarters out of the
U.K. to avoid the heavy bank levy being imposed on the largest U.K.based banks. The review will be completed by the end of the year, and a
decision to shift the headquarters out of London could result in a onetime cost of a couple of billion dollars over coming years.