HSBC Retail Business Has "Big Retreat" &Nbsp, And 30 Thousand People Worldwide.

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In August 1st, HSBC announced its semi annual report.

However, what is most noticeable is not its high pre tax profits and cost-effectiveness, but a new wave of layoffs in the global total of up to 30 thousand people, as well as a strategic pformation plan to sharply reduce retail business.

HSBC semi annual report shows that as of June 30, 2011, its pre tax profit amounted to US $11 billion 474 million, an increase of 3.3% over the first half of 2010. This result is better than that of Goldman Sachs, CICC, UBS and Deutsche Bank.

The share profit of common shareholders increased by 35% to $8 billion 929 million over the same period last year.

The board announced the second dividend payment of $0.09 per share in 2011, with a total dividend yield of approximately $1 billion 604 million.

In addition, the group

"This is the first step in the right direction (HSBC)."

In summing up half a year's performance, Ou Zhihua, chief executive officer of HSBC Group, said (Stuart Gulliver).

Where does Ou Zhihua's "right direction" lead to HSBC?

In August 1st, HSBC received HK $76.95, a slight increase of 0.52%.

Slim down plan

In May of this year, HSBC announced its strategy.

"These measures will involve layoffs."

Ou Zhihua said at a press conference.

HSBC's semi annual report shows that HSBC has restructured its operations in Latin America, the United Kingdom, France and the Middle East since the beginning of this year. The number of employees has decreased by about 5000.

"(we are) France (layoffs) 700, Britain, 700, Latin America 1700, the United States 1400, the Middle East 500 people."

Ou Zhihua explained further.

"(layoffs) is not over. HSBC will continue to lay off 25000 people from now to 2013," Ou Zhihua added. "But at the same time, we are constantly recruiting new employees. In the first half of this year, there are 1500 new employees in Asia and 800 new employees in Brazil.

In addition, HSBC has a turnover rate of about 10%, that is to say, there are about 13000 employees per year.

Therefore, layoffs in some areas will be carried out in a natural way, while in other areas, the number of employees actually reduced is far below the number of new employees.

He stressed that the 30 thousand layoffs do not mean that HSBC will reduce 30 thousand work plans, but shift some of its jobs to other business sectors, and the net decrease of employees will be less than 30 thousand.

However, HSBC did not disclose how much this wave of layoffs would contribute to its cost reduction.

Large withdrawal of retail banking

As part of the strategic plan, HSBC announced that it would sell the retail business in northern New York to First Niagara Bank, NA, involving 195 non strategic branches in July 31st.

The paction cost is equivalent to a premium of 6.67% of the pferred deposit.

Based on May 31, 2011 data, the paction volume is about $1 billion.

The trade announcement also pointed out that the US HSBC has decided to merge some 13 branches in Connecticut and New Jersey into the nearby HSBC branch in the first quarter of 2012, depending on the approval of the regulatory authorities.

HSBC will continue to focus its business and business banking on the development of the United States, HSBC said.

"The total number of employees in the United States will be reduced."

However, Ou Zhihua pointed out that the number of layoffs in the US does not include the number of employees who have been reduced by the sale of banking business.

He said that a sharp reduction in retail banking does not mean that HSBC will withdraw from the US retail banking market. "We have excellent banking system in the US, and we just want to close the US (business) model to the Canadian model."

In addition, HSBC also announced on the 1 day that it will end its retail banking business in Russia and Poland and sell three insurance businesses, including motor insurance in the UK, Afore in Mexico and captive management in Bermuda.

At the shareholders' meeting in May this year, Ou Zhihua pointed out that "retail banking will focus only on the market where we have lucrative business scale."

According to its semi annual report, this "strategic shift" seems to have highlighted the effect.

Business, global banking and capital markets continue to be the two most profitable businesses of HSBC's profits, while third of the retail banking and wealth management businesses generate significant pre tax profits. As of June 30, 2011, the business generated a profit of $3 billion 130 million, an increase of 131% over the same period last year.

Tighten supervision and tighten up

HSBC's continued downsizing may also be a rainy day for tighter global financial regulation.

In June last year, the British government planned to impose a bank tax on the size of the bank's assets and liabilities. It was levied at a 0.05% discount rate in 2011 and returned to a normal rate of 0.075% in 2012.

Since HSBC's headquarters is in the UK and the tax base is the size of the group's comprehensive assets and liabilities, if the UK is the base, the larger the scale will be, the higher the additional cost will be.

HSBC expects to have about 600 million dollars in tax revenue this year.

On the other hand, the Basel Banking Regulatory Commission also introduced new regulations in July.

28 financial institutions, including HSBC, are likely to be included in the draft assessment system issued by the bank on the basis of their global importance.

The paper recommends that banks of the global systemically important institutions, on the basis of capital accord III, raise the requirement of common equity, equivalent to 1% to 2.5% of risk weighted assets.

HSBC expects that its additional capital requirements will be close to the upper limit of the capital requirement.

Systemically important financial institutions are the key objects of monitoring in the Basel agreement III. They are financial institutions that are large and easy to impact on the stability of a country or the global financial system.

Its criteria include 5 indicators, namely, the size of banks, the relevance to other banks, the substitutability in a certain business or market, and the influence in the global market.

In addition, some additional capital requirements have been set up for these banks. Regulators have the right to suspend dividends and take restrictive measures against banks which are unable to meet their capital requirements.