HSBC Mulls Over Streamlining Retail Banking Business in Mexico

HSBC Holdings PLC HSBC is considering retrenching its retail operations outside the U.K. and Hong Kong, particularly in Mexico, to mitigate costs further and focus on wealthier “premier” clients. This was revealed by people familiar with the discussions to the Financial Times.Rationale Behind HSBC’s Operation Scale DownHSBC is reviewing the regions excluding its core markets to reduce its consumer presence. The company plans to focus on wealthier “premier clients.”HSBC entered Mexico by acquiring Grupo Financiero Bital in 2002, where, in 2012, it faced penalties of more than $2 billion by the U.S. regulatory authorities over anti-money laundering failures.HSBC lacks a competitive scale in Mexico, which is why it aims to scale down its retail business and focus on the premier clients who possess a wealthy wallet as well.The bank is not considering a full-scale pullback out of Mexico, rather it aims to cut back its retail presence meaningfully where it has lagged behind its rivals such as Banco Bilbao Vizcaya Argentaria, S.A. BBVA and Citigroup Inc.’s C Banamex. Further, HSBC is reviewing its standing in other nations as well, such as Malaysia and Indonesia, where executives perceive a higher benefit from focusing on premier banking rather than mass-market customers.HSBC’s Other Business Streamlining InitiativesHSBC’s CEO Georges Elhedery, who took the role in September, is heavily focused on the bank’s “premier” category clients as well as wealth management. In sync with this, the bank has taken steps to streamline its operations and reduce costs.Senior executives at the bank aim to achieve up to $500 million in annual savings from previously announced job cuts, according to two people with knowledge of the matter. However, they cautioned that the number could differ.Similarly, C completed its separation from the institutional banking business in Mexico from its consumer, small and middle market businesses earlier this month.  With this, Citigroup will now operate two separate financial groups in Mexico, Grupo Financiero Citi México and Grupo Financiero Banamex. Likewise, this July, BBVA announced the reorganization of its global Client Solutions area to enhance its customer experience.Elhedery has consolidated overlapping senior roles in the Commercial Banking and Global Banking and Markets segments amid an overhaul of operations across the firm.Further, this November, Reuters reported that HSBC plans to close its credit card operations in China as it faces challenges to achieve growth and profitability in the region. Additionally, this October, the company launched its initiative to simplify its organizational structure and operate through four distinct lines of businesses — Hong Kong, UK, Corporate & Institutional Banking and International Wealth & Premier Banking. Moreover, in September, The Guardian reported the bank aims to strengthen the U.K. arm of its wealth and private banking operations by recruiting more relationship managers who offer bespoke services and advice to rich clients in exchange for lucrative fees.HSBC’s Zacks Rank & Price PerformanceOver the past year, shares of HSBC have rallied 24.5%, outperforming the industry’s growth of 13.4%.Image Source: Zacks Investment ResearchCurrently, HSBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Citigroup Inc. (C): Free Stock Analysis Report Banco Bilbao Viscaya Argentaria S.A. (BBVA): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks