HSBC today said it plans to nearly halve its office space globally as part of a radical overhaul that will see the lender shift its focus to Asia.
The bank will pump roughly $6bn (£4.3bn) into the region over the next five years, focusing mainly on its wealth management business in greater China as well as Asia more broadly.
The shift will also see staff relocated from London and other European locations to markets such as Hong Kong and Singapore.
Overall, HSBC plans to cut its office footprint by 40 per cent over the long term, signalling a dramatic change in working patterns as a result of the pandemic.
But on a call this morning, chief executive Noel Quinn said the bank was committed to the UK and would retain its strong presence in Canary Wharf.
In a further shake-up, HSBC said it was looking to withdraw from its US retail banking business and was in talks to sell its struggling French retail banking unit.
The overhaul came as the banking giant posted a 34 per cent decline in pre-tax profit to $8.8bn in 2020, largely due to the impact of Covid-19.
Revenue also fell 10 per cent to $50.4bn, which it blamed on lower interest rates, partly offset by stronger performance in global markets.
The figures highlight the pressure on the banking sector as low interest rates around the globe take their toll on margins.
This has forced HSBC to turn its attention to Asia, where it already makes most of its profit.
As a result of the tougher trading, HSBC said it was scrapping its previous target of return on tangible equity of between 10 and 12 per cent, saying it would aim instead for 10 per cent over the medium term.
HSBC resumed its dividend for the first time since October 2019 after regulators put a temporary moratorium on payouts due to the pandemic. The bank will pay $0.15 per share.
Shares were down just over two per cent in morning trading.
HSBC’s strategy overhaul marks a blow for London, with the lender preparing to shift some of its top executives away from Canary Wharf.
Greg Guyett, co-head of global banking and markets, Nuno Matos, chief executive of wealth and personal banking and Barry O’Byrne, chief executive of global commercial banking are among those expected to make the move.
The shift would mean business divisions that account for around 95 per cent of HSBC’s global revenue will be run out of Hong Kong rather than London.
But the lender, which was founded as the Hong Kong Shanghai Banking Company, has come under criticism for some of its activity in the region.
Chief executive Noel Quinn was hauled in front of MPs last month over the bank’s decision to freeze accounts of pro-democracy activists in Hong Kong.
Quinn defended his actions and insisted the bank was committed to Hong Kong despite criticism from politicians around the world over its endorsement of a controversial national security law imposed by Beijing on Hong Kong.
“It’s understandable that there is to be a refocus on HSBC’s investment arm, given that it’s already injected a dose of short term relief with a spike of trading and hedging activity during the pandemic, which will help the group weather further turbulence,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“That could come in the form of fresh political risk given how relations between the West and China have taken a fragile turn in recent years.”