HONG KONG/LONDON: HSBC Holdings Plc is reviewing its US cards business and streamlining its wealth management and retail banking operations as it eyes savings of up to $3.5 billion, Europe's biggest bank said on Wednesday.
HSBC said the savings would help it reduce the proportion of revenue spent on expenses to 48-52 per cent by 2013 from 61 per cent in the first quarter, as it battles rivals such as Standard Chartered to keep costs under control.
The extent of HSBC Chief Executive Stuart Gulliver's task to streamline and revive HSBC was laid bare on Monday, after a jump in costs dragged quarterly profits down some 14 per cent.
"A target of 2013 will give them enough time," said John Wadle, an analyst with Mirae Asset Securities in Hong Kong.
"I think they are going to streamline high-cost income businesses and my personal guess is that the actual cost cutting may result in only about $1-2 billion."
HSBC will now focus its wealth management business to 18 of the most relevant economies, and limit retail banking to markets where it can achieve profitable scale, it said. Currently, the bank has operations in some 87 markets and employed more than 287,000 people as of June 2010.
HSBC said it would exit retail banking in markets including Russia and grow those operations in places such as Singapore, Mexico, Brazil and Turkey.
The US card and retail business delivered profit before tax of $306 million in the first quarter of this year, down about 15 per cent from a year ago. HSBC could free up to $25 billion from selling the credit card operations, analysts at Barclays Capital had estimated before the statement.
The United States has typically been seen by many analysts as a low-return area for the bank, following HSBC's disastrous purchase of the Household mortgage business there before the global financial crisis.
It currently has some $33 billion in customer loans and 475 branches there.
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