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Less than half a year into his role as HSBC's Chief Executive, Mr Stuart Gulliver, outlined plans for a strategic overhaul, including $3.5 billion in cost cutting, a focus on wealth management businesses, and the possible sale of unprofitable businesses.
The bank plans to cut costs by between $2.5 billion and $3.5 billion by 2013, 52-year-old Gulliver told investors at the firm's second ever investor day held in its Canary Warf headquarters.
Cuts will be made across the group and will include cuts to staffing levels, and greater centralisation of processes across the group.
“It is a bank that has been run as a reasonably loose federation of businesses,” Mr Gulliver said.
The firm is targeting cutting costs as a proportion of revenue to up to 52 per cent, from its current level of 60.9 per cent, in the next three years.
The bank has been targeting a 12-15 per cent return on investment, something, Mr Gulliver said, was achievable with the strategic changes.
HSBC's US credit card and 475-branch network businesses will also be the subject of a strategic review. Retail operations globally will be subject to scrutiny, and underperformers will either be revamped or closed down, Mr Gulliver said, citing the example of the Russian retail space, which the bank has recently said it would exit.
Focus area
The company will hone its wealth management business, concentrating on 18 countries where it believes it can gain business from wealthy customers, and from which it believes it can generate some $4 billion in revenues.
The need for the bank to address its high cost structure, among other things, was highlighted when the bank released its first quarter results earlier this week, with costs relative to income sharply above target levels.
“We have struggled to tell a coherent story,” Mr Gulliver admitted on Wednesday, as he unveiled the plans on Wednesday. He insisted that the cost cutting drive was not about withdrawing from expansion. “We will continue to invest in markets that have strategic importance to us and high actual and potential returns,” he said.
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