What HSBC Really Needs by Arindam Nag
Summary: Shares of global banker HSBC (HBC) have underperformed over the last year due to losses suffered at the hands of its U.S. subprime mortgage exposure, leading some shareholders to call for a breakup which would localize its units. Barron's disagrees. HSBC has historically dealt with systemic risk better than its peers because of its vast global exposure, an advantage that would be lost if the company were broken up into regional units. Asian growth may be peaking, which would mean undue risk to a standalone Asia unit. What HSBC does need, Barron's says, is a new Chairman (one who wasn't a former CEO) and a shakeup of its board, which lacks diversity. Non-executive directors met only twice last year (vs. Citigroup Inc.'s (C) seven times). The company also needs tighter control over its global assets, to accelerate the transfer of strategies between regions, and to learn how to integrate its acquisitions more quickly.