William Barton
HSBC Holdings (NYSE:HSBC) is considering a plan to pull out of as many as a dozen countries to focus on growth in Asia, which already accounts for a majority of the bank’s profits, according to a media report on Thursday. HSBC shares gained 1.3% in U.S. premarket trading.
HSBC Chief Financial Officer Georges Elhedery told Reuters that none of the markets it’s reviewing for exit “is material enough on its own to change the profile of the overall business, but as we progress through and execute on these assessments, we do expect them to contribute towards that shift to Asia.” He declined to say which markets were being evaluated for an exit and what the timeframe might be.
The move comes after shareholder Ping An Insurance (OTCPK:PNGAY) (OTCPK:PIAIF) has been urging the British bank to put more of its attention to growth in Asia, where it gets ~78% of its total profit. Last year, Ping An had proposed that HSBC (HSBC) spin off its Aisan business in an effort to boost its stock price. Then in November had pushed for more aggressive cost-cutting.
At the time, Ping An Insurance (OTCPK:PNGAY) wanted HSBC “to review its global resource allocation strategy, reallocate more resources to Asia to gain higher return, and exit sub-scale peripheral ex-Asian market.”
HSBC (HSBC) had already started to pull out of all or parts of markets. In November, it agreed to sell HSBC Canada to Royal Bank of Canada (RY) of $10.1B. Reuters also cited planned sales in France, Russia, and Greece.
Latin American and European operations may also be under review, Reuters said, as Latin America made up under 5% of group profit. Elhedery, though, said Mexico isn’t under review as it has been “performing very will for us.”
