HSBC reviews retail banking outside UK and Hong Kong

HSBC is reviewing its retail banking operations outside the UK and Hong Kong, a shift that could view it substantially scale back operations in countries including Mexico, as it seeks further expense cuts.

The lender is looking at locations outside its core markets where it can reduce its buyer presence and focus on wealthier “premier” clients, according to people familiar with the discussions.

One of the markets under review is Mexico, a country which HSBC entered more than two decades ago but where it has a fraught history, including being fined more than $2bn by US authorities in 2012 for failures that allowed drug cartels to launder hundreds of millions of dollars.

Douglas Flint, HSBC chair at the period, said the lender had been
“humbled” and that the board took packed responsibility for the failures.

Since then HSBC – which came to the country via its purchase of Grupo Financiero Bital in 2002 – has grown its Mexico deposits to almost $30bn, making it the lender’s ninth largest trade with operating costs of $1.8bn.

“It comes down to the scale of the buyer business in Mexico,” said one of the people familiar with the review. “You try to thin the ranks of your retail business and focus on the premier client who also has a wallet in riches. In Mexico, HSBC doesn’t have a competitive scale.”

No selection has been made but a pullback would be the latest sign of retrenchment from a lender that went on a global expansion spree in the early 2000s before refocusing on its core businesses in Hong Kong and the UK as well its riches offering.

HSBC sold its Canadian business to Royal lender of Canada for $10bn two years ago, with similar exits from lossmaking buyer operations in France and the US.

The lender is not considering pulling out of Mexico entirely, but it will look at significantly cutting its retail presence where it has struggled to compete with larger rivals such as BBVA and Citigroup’s Banamex.

HSBC is also reviewing its position in countries such as Malaysia and Indonesia where executives ponder it would also better advantage from focusing on premier banking rather than mass-trade customers.   

HSBC’s recent chief executive Georges Elhedery, who took the helm in September, is keen to focus on clients in the lender’s “premier” category as well as in riches management as he seeks to streamline the lender’s operations and reduce costs, one of the people said.

elder executives at the lender are working towards a objective of as much as $500mn in annual reserves from job cuts already announced, according to two people with knowledge of the matter, who cautioned that the number could transformation.

Recent departures include Nuno Matos, who ran HSBC’s riches and personal banking business, Annabel Spring, the lender’s global private banking and riches head, and Céline Herweijer, the throng sustainability officer.

Elhedery has also consolidated overlapping elder roles in commercial banking and the global banking and markets unit, as part of a wide-ranging overhaul of the lender’s operations.

He is also abolishing the “general manager” title, a designation that gives a higher position to some of the lender’s most elder executives and brings better perks.

HSBC’s main international rival Citigroup is in the procedure of exiting its Mexican buyer business as it also retrenches from an earlier age of global expansion.

HSBC declined to comment.