HSBC's six stage job annihilation checklist. Would you survive?
HSBC is the latest bank to divulge its second quarter results. The investment bank (global banking and markets) hasn't done very well: net income fell 21% year-on-year at GB&M in the second quarter and return on risk weighted assets across GB&M and BSM (balance sheet management) rose from 2.1% to...2.3%.
Meanwhile, HSBC continues to cut costs across the bank. In total, it aspires to extract $4.5bn to $5bn of costs before 2017.
As with every bank, HSBC is heavily focused on strategy. Unlike other banks, it's devised its own 'six filter' strategy checklist to determine which businesses will stay and which businesses will go. With an eye to pulling out of entire verticals, this checklist is being applied across the business. Banks like Deutsche and Credit Suisse, which are also looking to pull out of whole businesses may want to sit up and take note.
These are the filtration stages:
1. Is the business internationally connected?
2. Is the business going to benefit from economic development?
3. Is the business profitable?
4. Is the business efficient (what's the cost/revenue ratio)?
5. Is the business liquid (can the assets be easily converted into cash)?
6. Is the business at risk of financial crime?
In the past quarter, HSBC has applied its six principles to its Turkish and Brazilian operations and found them lacking. It's also cut $50bn of assets from global banking and markets - targeting, we suppose, trading desks that don't meet the requirements above...