Daily Management Review

US Will Remain Its Vital Market Despite Retail Exit, Says HSBC


US Will Remain Its Vital Market Despite Retail Exit, Says HSBC
After the British lender HSBC announcing the sale of its mass market retail banking business in the United States, it reiterated the importance of the market as being hey to its growth plans even though it has for long struggled to make a strong profit in the market because of intense competition from the larger domestic banks there.
HSBC chief executive Noel Quinn said at the lender's annual shareholder meeting in London that the business of the bank in the United States will be focused on internationally oriented corporate customers.
"The U.S. is key to our international network and an important contributor to our growth plans," Quinn said.
Its exit from the retail business in the US, awaited by its investors and market watchers for quite some time now, was announced by HSBC on Thursday, with the  company now focused on its Asia business form where it has been able to reap the maximum of its profits in recent years.
HSBC, the largest bank of Europe, is also reported to be considering sale of its French retail banking operations in line with the same Asia strategy of the bank and according to recent reports, has already entered into the final stages of negotiations for selling off that business to the private equity firm Cerberus.
There was however a small group of people outside Friday’s meeting place who criticised the bank for not being forgiving to the debt of the poor countries in the wake of the Covid-19 pandemic hit to them which has been repeatedly called for by charities.
Loan repayments for many low income countries have been frozen by the G20 governments under the Debt Service Suspension Initiative (DSSI) during the pandemic.
According to a report this week, there are almost 550 private sector bonds that have been issued by 62 low and middle income countries w3hich have a total value of about $691 billion in principal and about $330 billion would be needed for debt servicing over the next five years for those bonds.
Any specific requests from a country its debts cancellation has not received yet by the bank, HSBC Chairman Mark Tucker said.
The speed of the bank halting financing of coal power projects was also questioned by the shareholders of the bank at Friday’s annual general meeting. In March, the lender had talked about its plans of phasing out of its finding for the coal industry in the developed world by 2030 as the bank conceded to investor pressure to completely stop funding for fossil fuel powered projects.
A signal of a group of investors of the bank reaching an agreement with Europe’s biggest bank became evident when the investors, who manage about $2.4 trillion in assets and who had previously this year filed a resolution that would have bound the lender to make stronger commitments, withdrew the proposal.
It is better to help clients transition away from fossil fuels, rather than simply stop working with them, said HSBC's Tucker.