HSBC to expand further in China under new head

HSBC will seek to cut its internal bureaucracy and expand investment in southern China to the rest of the country, said executives at the bank, in the first hints of the strategy to be pursued by its new leaders.

Mark Tucker, the bank’s first externally appointed chairman, told analysts and investors at a meeting in Hong Kong that trimming the bank’s bloated governance structure was one of his top priorities.

Tucker, who took over as chairman in October 2017, has already cut the lender’s board from more than 20 people down to 14 and plans to slash more committees and processes, according to analysts present at the meeting.

The presentation offered the first sign for investors that the bank’s new chief executive John Flint will intensify HSBC’s “pivot” to Asia and China in particular, despite some setbacks in the plan launched in June 2015.

HSBC said at that time it would hire 4,000 new staff and invest billions to make the Pearl River Delta its gateway to China, a retail and corporate banking push that bet on a technology boom, infrastructure spending and a growing middle class.

But the presentation to investors on Monday showed the bank’s profits in the Chinese mainland retail banking in 2017 fell by 7 percent from a year earlier.

Chinese regulations that stipulate customers must visit a branch to open an account have slowed HSBC’s technologybased push, analysts at Keefe, Bruyette & Woods said, since the lender only has 227 outlets in China versus local banks that have thousands each.

The presentation gives the clearest indication yet that HSBC’s new management team will intensify its focus on China, betting on the country’s economic growth to bolster profits that have sagged in recent years amid low global interest rates, restructuring costs and ever-tighter regulation.

Tucker said investors would get a fuller picture of Flint’s new strategy before the bank announces its first-half results in July, analysts at the meeting reported.

HSBC has appointed Mukhtar Hussain, the bank’s chief executive in Malaysia, as the Asia-Pacific head for China’s Belt and Road initiative, media reports said Tuesday.