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HSBC Board Pressures Executives to Deepen Restructuring
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The board of HSBC Holdings (HSBC - Free Report) has decided that the bank needs to take drastic measures in order to cope with the crisis that has resulted from the coronavirus pandemic. This was reported by the Financial Times.
Hence, the company’s board is now pressurizing executives to deepen the biggest restructuring in the bank’s 155-year history. Per a person familiar with the discussions, HSBC wants a new strategic plan “sooner rather than later”.
Earlier in February, the bank had announced plans of slashing 35,000 jobs, reducing $4.5 billion in expenses and $100 billion of risk-weighted assets by radically shrinking its businesses in the United States as well as Europe. Notably, the bank is planning to redirect resources and invest in growth areas like Asia, from where almost 50% of its revenues come.
The company put a pause on job cuts due to the already worsening conditions that resulted from the pandemic. However, now, HSBC’s board is urging executives to initiate more radical changes, which may include further lay-offs or even a possible sale of its U.S. business along with its retail network in France and operations in smaller non-strategic countries.
In the United States, the company has a small retail network alongside trading and transaction banking operations. While HSBC did shrink its U.S. operations by almost a third in February, management is now contemplating whether the business is viable at all.
A person familiar with the matter said, a U.S. sale “is possible, but it’s very early in terms of making that decision. What HSBC needs to understand is, for better or worse, their opportunity is in China.”
Another person said, “We have to have a business there [the US], there’s no question of that, but the shape we’ve got to look at again.”
Notably, at the time of announcing the first-quarter 2020 results, the company had projected higher expected credit losses during the year as a result of the virus-induced crisis. Also, it expects lower customer activity levels and reduced global interest rates to put pressure on revenues.
Shares of HSBC have lost 41.3% so far this year compared with a 42.1% decline recorded by the industry.
Currently, the company carries a Zacks Rank #4 (Sell).
A few better-ranked stocks from the finance space are mentioned below.
Tradeweb Markets Inc. (TW - Free Report) has witnessed an upward earnings estimate revision of 6.6% for 2020 over the past 60 days. This Zacks Rank #1 (Strong Buy) stock has gained 34.9% so far this year.
GAIN Capital Holdings, Inc.’s current-year earnings estimates increased significantly in 60 days’ time. Further, the company’s shares have appreciated 60.5% year to date. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mackinac Financial Corporation has witnessed an upward earnings estimate revision of 47.1% for the ongoing year in the past 60 days. This Zacks #2 Ranked (Buy) stock has depreciated 45.7% so far this year.
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HSBC Board Pressures Executives to Deepen Restructuring
The board of HSBC Holdings (HSBC - Free Report) has decided that the bank needs to take drastic measures in order to cope with the crisis that has resulted from the coronavirus pandemic. This was reported by the Financial Times.
Hence, the company’s board is now pressurizing executives to deepen the biggest restructuring in the bank’s 155-year history. Per a person familiar with the discussions, HSBC wants a new strategic plan “sooner rather than later”.
Earlier in February, the bank had announced plans of slashing 35,000 jobs, reducing $4.5 billion in expenses and $100 billion of risk-weighted assets by radically shrinking its businesses in the United States as well as Europe. Notably, the bank is planning to redirect resources and invest in growth areas like Asia, from where almost 50% of its revenues come.
The company put a pause on job cuts due to the already worsening conditions that resulted from the pandemic. However, now, HSBC’s board is urging executives to initiate more radical changes, which may include further lay-offs or even a possible sale of its U.S. business along with its retail network in France and operations in smaller non-strategic countries.
In the United States, the company has a small retail network alongside trading and transaction banking operations. While HSBC did shrink its U.S. operations by almost a third in February, management is now contemplating whether the business is viable at all.
A person familiar with the matter said, a U.S. sale “is possible, but it’s very early in terms of making that decision. What HSBC needs to understand is, for better or worse, their opportunity is in China.”
Another person said, “We have to have a business there [the US], there’s no question of that, but the shape we’ve got to look at again.”
Notably, at the time of announcing the first-quarter 2020 results, the company had projected higher expected credit losses during the year as a result of the virus-induced crisis. Also, it expects lower customer activity levels and reduced global interest rates to put pressure on revenues.
Shares of HSBC have lost 41.3% so far this year compared with a 42.1% decline recorded by the industry.
Currently, the company carries a Zacks Rank #4 (Sell).
A few better-ranked stocks from the finance space are mentioned below.
Tradeweb Markets Inc. (TW - Free Report) has witnessed an upward earnings estimate revision of 6.6% for 2020 over the past 60 days. This Zacks Rank #1 (Strong Buy) stock has gained 34.9% so far this year.
GAIN Capital Holdings, Inc.’s current-year earnings estimates increased significantly in 60 days’ time. Further, the company’s shares have appreciated 60.5% year to date. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mackinac Financial Corporation has witnessed an upward earnings estimate revision of 47.1% for the ongoing year in the past 60 days. This Zacks #2 Ranked (Buy) stock has depreciated 45.7% so far this year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>