LOOK beyond the huge numbers that HSBC has said it is putting aside for fines, and you might just find something that looks like a banking success story.
While the world’s attention has understandably been distracted by Libor, PPI and tax accusations, Stuart Gulliver has been getting his house in order. This is most evident when you look at progress on the cuts made as part of Gulliver’s retrenchment from struggling areas – HSBC saved another $800m in the first half of this year, bringing the bank’s total annualised cost savings to a huge $2.7bn.
More than 14,000 staff have been let go since the end of last year, and plans have been announced to cut loose 19 business that aren’t pulling their weight. Targets are being hit aggressively and ahead of time – Gulliver is not hanging about.
At the same time, he also seems to be pushing resources where they’re most needed. By sticking to its longheld growth strategy of focusing on emerging markets, HSBC saw underlying profit shoot up 22 per cent in Hong Kong and 13 per cent in Asia. The two regions alone contributed 74 per cent of the bank’s total profits before tax over the past six months.
Gulliver is right. The list of penalties that HSBC’s senior management was forced to read out yesterday is shameful and embarrassing – as the recent tsunami of scandals has been for the entire sector.
But they are also, we hope, a one off – just like the pension credits that skewed HSBC’s balance sheet in a more positive direction last year.
A potential $2bn in fines is a complete disaster, but here’s hoping Gulliver’s contrition doesn’t mean he loses sight of the bigger picture – and the opportunities it presents.