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Here's Why HSBC is Scaling Back Swiss Private Banking Business
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Per the Financial Times, HSBC Holdings (HSBC - Free Report) is trimming its workforce and reducing office space in Switzerland. Specifically, the company is slashing 110 support staff in its private bank and shutting down two floors of its Geneva-based Quai des Bergues office.
Last year turned out to be a bad one for HSBC’s private banking business in the country, wherein wealthy clients withdrew a net $1 billion of their money. This is in contrast with other major Swiss banks, including UBS Group AG (UBS - Free Report) , which reported a solid jump in client assets in 2021. Notably, UBS Group reported net profit attributable to shareholders of $7.46 billion in 2021, up 14% year over year.
While HSBC is scheduled to announce 2021 numbers on Feb 22, persons familiar with the performance cited that net new money brought in by the company’s Swiss private bank had declined.
Given the dismal performance in the country, HSBC is reducing office space and shifting several back- and middle-office roles to cheaper locations in Poland and Mumbai. Per the internal memo seen by the Financial Times, “This will reduce our Geneva building cost by 20 per cent for the coming years, representing a significant contribution to improving the profitability of the Swiss bank.”
In fact, reduction in office space is in sync with HSBC’s initiative to improve operating efficiency, which includes lowering global head-office costs going forward. Like HSBC, Barclays (BCS - Free Report) is also undertaking cost-saving actions to improve efficiency. Over the medium term, Barclays targets the cost to income ratio to be below 60%.
Further, while HSBC is planning to trim its presence in the Swiss market, it has plans to strengthen its footprint in Asia, including Hong Kong and China. For this, HSBC has been hiring private bankers across the region.
Also, HSBC has announced deals to acquire L&T Investment Management Limited and 100% of the issued share capital of AXA Insurance in Singapore. Further, the company has received regulatory approval from the China Banking and Insurance Regulatory Commission to acquire the remaining 50% stake in its China life insurance joint venture — HSBC Life Insurance Company Limited.
Over the past year, shares of HSBC have rallied 35%, outperforming the industry’s growth of 19.5%.
Image: Bigstock
Here's Why HSBC is Scaling Back Swiss Private Banking Business
Per the Financial Times, HSBC Holdings (HSBC - Free Report) is trimming its workforce and reducing office space in Switzerland. Specifically, the company is slashing 110 support staff in its private bank and shutting down two floors of its Geneva-based Quai des Bergues office.
Last year turned out to be a bad one for HSBC’s private banking business in the country, wherein wealthy clients withdrew a net $1 billion of their money. This is in contrast with other major Swiss banks, including UBS Group AG (UBS - Free Report) , which reported a solid jump in client assets in 2021. Notably, UBS Group reported net profit attributable to shareholders of $7.46 billion in 2021, up 14% year over year.
While HSBC is scheduled to announce 2021 numbers on Feb 22, persons familiar with the performance cited that net new money brought in by the company’s Swiss private bank had declined.
Given the dismal performance in the country, HSBC is reducing office space and shifting several back- and middle-office roles to cheaper locations in Poland and Mumbai. Per the internal memo seen by the Financial Times, “This will reduce our Geneva building cost by 20 per cent for the coming years, representing a significant contribution to improving the profitability of the Swiss bank.”
In fact, reduction in office space is in sync with HSBC’s initiative to improve operating efficiency, which includes lowering global head-office costs going forward. Like HSBC, Barclays (BCS - Free Report) is also undertaking cost-saving actions to improve efficiency. Over the medium term, Barclays targets the cost to income ratio to be below 60%.
Further, while HSBC is planning to trim its presence in the Swiss market, it has plans to strengthen its footprint in Asia, including Hong Kong and China. For this, HSBC has been hiring private bankers across the region.
Also, HSBC has announced deals to acquire L&T Investment Management Limited and 100% of the issued share capital of AXA Insurance in Singapore. Further, the company has received regulatory approval from the China Banking and Insurance Regulatory Commission to acquire the remaining 50% stake in its China life insurance joint venture — HSBC Life Insurance Company Limited.
Over the past year, shares of HSBC have rallied 35%, outperforming the industry’s growth of 19.5%.
Currently, HSBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.