Home Economy HSBC to quit retail banking in the United States

HSBC to quit retail banking in the United States

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HSBC Holdings plc (LON: HSBA) has been struggling to compete well with the big fish in the United States for a while. In a report on Saturday, Financial Times said that the largest European bank was now planning on quitting retail banking completely in the United States.

At £4.04 per share, HSBC is currently more than 30% down year to date in the stock market. Shares of the British multinational investment bank had plummeted to as low as £2.83 in the last week of September. HSBC had started the year at a per-share price of £5.95.

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HSBC is yet to make an official announcement about such plans

The report also said that HSBC’s senior management was expected to present the plan and seek approval from its board in December. The investment bank has not yet made an official statement on Financial Times’ report.  HSBC published its financial report for the fiscal third quarter in the last week of October that highlighted a massive 54% decline in its net profit.

HSBC recently acknowledged financial challenges that it said were further aggravated this year due to the ongoing COVID-19 crisis that has so far infected more than 1.6 million people in the United Kingdom and caused over 58 thousand deaths. The London-headquartered bank also said in August that it will accelerate its restructuring plan that includes slashing its workforce by 35 thousand jobs in a bid to shore up finances.

In an announcement last month, the British multinational raised its target for annual cost savings by 2022. It is now aiming for full-year costs of under £23.23 billion that is more ambitious as compared to the target it laid out in February. In comparison, HSBC had valued its operating expenses at £31.70 billion in fiscal 2019.

HSBC’s American division reported £388 million of pre-tax loss

HSBC served the U.S. market as a full-service, universal bank for 40 years. The American division reported £388 million of pre-tax loss in the first nine months of the current financial year, after posting £209 million of loss in fiscal 2019 and £136 million in fiscal 2018.

HSBC performed slightly downbeat in the stock market last year with an annual decline of close to 10%. At the time of writing, the 6th largest bank in the world that has total assets of £2.03 trillion, is valued at £82.46 billion.