HSBC to Wind Down Retail Banking Business in New Zealand
In another step toward its pivot to Asia strategy, HSBC Holdings HSBC will exit its retail banking business in New Zealand. This was announced following the strategic review of its business in the country.
HSBC, in a statement, noted, “It has become clear that we can no longer justify investing into this business given the changing operating requirements in the market and scalability of the business.” The planned exit from wealth and personal banking operations will occur in a phased manner that will take “several years.”
Further, the lender has stopped accepting new retail customers in the country, effective immediately. Nonetheless, HSBC, which has had a presence in New Zealand for more than 35 years, will continue to grow its Wholesale Banking business.
Earlier in May, the chief financial officer Georges Elhedery, in an interview with Reuters, acknowledged that HSBC is weighing an exit from at least 12 countries. Though he declined to name the countries under scrutiny or the time frame, he noted businesses in some countries have been making “slower progress than others” and exiting these will have no material impact on HSBC’s financials or business structure.
HSBC has already been making efforts to further boost its presence across Asia. Last year, the company acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited. Further, the company raised its ownership stake in its China securities JV – HSBC Qianhai Securities Limited – to 90% from 51%.
Moreover, over the last two years, HSBC has announced its plan to exit fully or some parts of its businesses in France, Greece, Russia and Canada, while having already left the U.S. retail banking space.
In November 2022, the company signed an agreement to divest its Canada banking business to the Royal Bank of Canada RY. Per the agreement, RY will acquire all the issued common equity of HSBC Canada. This deal will increase RY’s market share in Canada’s banking landscape, which is already dominated by a few large lenders.
While the plan to sell HSBC’s French retail banking operations has hit a roadblock as the closure seems now less certain owing to a steady increase in interest rates, HSBC will be exiting Greek and Russian businesses once regulatory and government approvals are received.
Over the past six months, shares of HSBC have rallied 24.4%, outperforming the industry’s growth of 7.8%.
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Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Citigroup C is another major global bank undertaking business restructuring efforts by exiting less profitable markets. As part of its major strategic action announced in April 2021, the company will exit the consumer banking business in 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea.
C has already made substantial progress on this front and identified the U.K., Russia and Mexico as other countries from where it intends to exit. These efforts are expected to free up capital, which Citigroup will likely invest in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth.
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