HSBC Has A Lot Of Work Left To Do
Stephen Simpson, CFA
Stephen Simpson, CFA
Hong Kong Protests Offer An Interesting Opportunity On HSBC
HSBC Has A Valuable Core Franchise, But A Lot Of Work To Do
Stephen Simpson, CFA
Stephen Simpson, CFA
May 22, 2015, 7:44 AM
- HSBC CEO Stuart Gulliver in February said the bank's four problem businesses - Brazil, Mexico, Turkey, and the U.S. - needed to be improved or sold, thus setting the stage for the rumors.
- Reuters reports sales processes are underway in Brazil and Turkey, but the U.S. and Mexican operations are likely to be kept. Both are sizable businesses, but not among the top five lenders in either country.
- A preferred bidder for the Brazil unit could come next month as CEO Gulliver takes part in a strategy day on June 9.
- Source: Reuters
- Previously: Santander Brasil mulls purchase of HSBC's Brazil unit (May 19)
May 20, 2015, 3:24 AM
- HSBC (NYSE:HSBC) has now become one of the biggest global banks to say it will begin charging clients on deposits in a basket of European currencies to prevent its profit margins from being crushed in a record low-interest rate environment.
- The unusual steps come after the ECB became the first big central bank to announce a negative deposit rate - in effect a penalty on banks parking their surplus cash - last year.
May 19, 2015, 12:44 PM
- "We haven't made an offer, we haven't even opened a data room for this operation," says Banco Santander Brasil (NYSE:BSBR) CEO Jesus Zabalza, cautioning things are still in an "initial process."
- It's been previously reported that HSBC has hired advisers to pitch a sale of a sizable piece of its Brazilian unit - the 7th largest bank in Brazil with a 2.7% market share of assets.
- Source: WSJ
- Previously: Report: HSBC to receive bids for Brazil unit by June (May 14)
May 14, 2015, 7:46 AM
- The company could select its preferred bidder as early as next month, reports Reuters, with the sale expected to be finalized by August.
- HSBC Bank Brasil Banco Multiplo might go for no more than book value, or $3.34B, as the operation currently isn't profitable.
- Brazil banking giants Banco Bradesco (NYSE:BBD), Banco Santander Brasil (NYSE:BSBR), and Grupo BTG Pactual are all natural bidders, and Canada's Scotiabank had shown early interest, but it appears to have fizzled out. China's Industrial Bank is also considering a bid, according to Reuters' sources.
May 12, 2015, 12:37 PM
- "There would be a massive impact across London if a bank the size of HSBC left," says Davide Serra, founder of hedge fund Algebris, and who has advised the government on its holdings of Lloyds (NYSE:LYG) and RBS. "We are talking 10% of London's GDP, if you factor things like personnel moving."
- What has HSBC along with Standard Chartered (OTCPK:SCBFF) considering pulling their HQ out of the U.K. is the country's bank levy - an annual tax on U.K. banks of 0.21% of assets (foreign banks pay that amount only on their U.K. liabilities). Serra: “The bank levy is totally unsustainable. If the U.K. takes 25% of U.K. banks’ profitability, no bank will want to be domiciled here. It is a total disaster for the U.K.”
- Algebris' long/short equity strategy is ahead 27% YTD, while its credit strategy is up 5.14%. Also among its bank holdings is the equity and credit of Lloyds, and Serra calls CEO Hora Osorio one of the bet bank chiefs in Europe.
May 5, 2015, 5:24 AM
- Despite the recent scandals that have plagued the bank, HSBC's (NYSE:HSBC) first-quarter profit beat analysts' estimates, benefiting from an increase in securities revenue and lower bad loans.
- Pretax profit rose to $7.1B vs. $6.8B a year earlier.
- The bank also said it would make the decision whether to move its headquarters out of the U.K. within months rather than years.
- HSBC -2.4% premarket
Apr. 30, 2015, 11:55 AM
- HSBC (HSBC -0.8%) runs the 7th largest bank in Brazil, with a 2.7% market share based on assets, and has hired Goldman Sachs to help find a buyer for most of it, reports the WSJ. Possible buyers would naturally include the country's banking giants, Banco Bradesco (BBD -1.9%) and Banco Santander Brasil (BSBR -2.1%).
- The move comes ahead of HSBC's presenting of a new strategy aimed at those who say the bank is too big to effectively manage.
- HSBC is also weighing a retreat from Turkey, according to the Journal's sources, but the U.S. and Mexico are expected to be spared in the strategic review.
Apr. 27, 2015, 7:14 AM
- As HSBC mulls moving its HQ out of the U.K., it is also considering a $20B spinoff of its British retail operation, according to The Sunday Times. The spin, say insiders, could speed up the bank's exit from the U.K.
- The board feels its hand is being forced by regulators' "ring-fencing" scheme, which forces lenders to put retail operations into separate companies with independent boards and chairmen.
- "If you can't control the retail arm, why would you hold shares in it," says one source. "You can control a commercial link, but there is no point."
- Shares +2.7% premarket
- Previously: HSBC launches review on whether to move headquarters (April 24)
Apr. 24, 2015, 5:34 AM
- Citing the impact of regulatory and structural reforms, HSBC (NYSE:HSBC) has ordered an immediate review of whether it should continue to be headquartered in the U.K.
- "The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is underway," said HSBC Chairman Douglas Flint at the bank's annual general meeting in London.
- If it decided on a departure, HSBC would probably relocate its headquarters to Hong Kong, where it moved from in 1993.
- HSBC +3.4% premarket
- Previously: Britain bank tax may push HSBC, StanChart to new home (Apr. 20 2015)
Apr. 20, 2015, 12:04 PM
- "The ROE outlook for the European banks remains poor in our view," says Goldman. "Margins, impacted by monetary policy, are declining; the standalone cost-cutting opportunity has diminished; and provisioning leverage has played out."
- To boost returns, Goldman sees strategic, rather than operational improvements as required. Among the big players, HSBC (HSBC +1.7%) has the most to gain from strategic streamlining, says the team, adding the stock to its Conviction List.
- Pulled from the List to make room for HSBC is BBVA (BBVA -0.7%), whose rating has been downgraded to Neutral. Also part of the ratings changes, Bank of Ireland (OTCPK:IREBY -1.8%) is boosted to Neutral from Sell.
- Previously: HSBC higher after Goldman touch (April 20)
Apr. 20, 2015, 9:52 AM
- HSBC (HSBC +1.6%) is an outlier to the upside among the U.K. banks today after Goldman Sachs puts the previously Buy-rated stock on its Conviction Buy list.
Apr. 20, 2015, 3:07 AM
- As tax jumps on U.K. banks become increasingly more painful, HSBC (NYSE:HSBC) and Standard Chartered (OTCPK:SCBFF) are weighing the possibility of calling it quits on their London home.
- The banks, which make most of their profits in Asia, face a combined $2B bill this year under the annual U.K. bank tax, up from $1.5B last year and almost double what they paid in 2013.
- HSBC would probably move back to Hong Kong, where it moved from in 1993, while StanChart would likely relocate to Singapore, where most of its businesses are already run.
- However, the price-tag of moving could also be heavy. Analysts estimate the cost to be between $1.5B-$2.5B per bank.
Apr. 9, 2015, 1:21 PM
- A French investigation into tax-related issues at HSBC's Swiss subsidiary, has expanded to include the parent company. The French have set bail at €1B vs. just €50M when the probe focused on just the Swiss unit.
- The expanded investigation, reports The Guardian, continues to focus on large-scale patterns of wrongdoing at the bank, including enabling tax avoidance and evasion, handing out bundles of cash to clients without question, and providing accounts to the friends and families of dictators.
- “((NYSE:HSBC)) intends to appeal and will defend itself vigorously in any future proceedings.”
Apr. 2, 2015, 4:18 AM
- HSBC (NYSE:HSBC) is making progress toward cleaning up its operations, after reaching a $1.92B settlement of charges related to money laundering, but has not done enough, announced the U.S. Department of Justice on Wednesday.
- The government made its criticisms after reviewing the findings of an independent monitor, Michael Cherkasky, who was appointed in connection with the bank's 2012 deferred prosecution agreement with U.S. authorities.
- Previously: Bloomberg: Monitor says HSBC falling short on compliance (Mar. 30 2015)
Apr. 1, 2015, 6:59 AM
- NY Judge John Michalski has dismissed a lawsuit filed by the state's attorney general which accused HSBC of ignoring a law designed to protect homeowners from foreclosure.
- The lawsuit, filed in 2013 by Eric Schneiderman, alleged HSBC violated a state law known as a request for judicial intervention, which entitles homeowners to settlement conferences within 60 days to negotiate loan modifications.
- Michalski dismissed the case by ruling that HSBC's delay or failure in filing the administrative paperwork was procedural, not substantive, and did not qualify as an "illegal act."
Mar. 30, 2015, 3:44 PM
- The 1K page report cites a number of issues with the bank's reforms and compliance procedures, and finds the pace of change inadequate. Bank execs reportedly engaged in shouting matches with the auditors, who claim documents were created after the fact to explain why alerts were dismissed.
- As part of a $1.9B 2012 settlement, HSBC agreed to install a monitor, and his first full-year report was scheduled to be filed at the DOJ this January, with a summary to be made public this week.
- “The idea that a company as big and vast and as far-flung as HSBC was going to be able to do this without powerful incentives for people at the top was probably a gaping hole in a settlement reached some time ago," says a law professor.
- Source: Bloomberg
HSBC Holdings Plc operates as a holding company. It provides banking and financial services through the following global businesses, including Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets and Global Private Banking. The Retail Banking and Wealth Management... More
Industry: Foreign Money Center Banks
Country: United Kingdom
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