HSBC revives plan to slash 35,000 jobs, freeze hiring to cut costs: Report

HSBC is resuming a massive redundancy plan it had put on ice after the coronavirus outbreak, and will cut 35,000 jobs over the medium term, a memo seen by Reuters on Wednesday showed.
The bank will also maintain a freeze on almost all external recruitment, Chief Executive Noel Quinn said in the memo sent to the bank's 235,000 staff worldwide.

"We could not pause the job losses indefinitely - it was always a question of 'not if, but when'," Quinn said.
A bank spokeswoman confirmed the contents of the memo.
In March, HSBC had postponed the job cuts, part of a wider restructuring to cut costs, saying the extraordinary circumstances of the COVID-19 pandemic meant it would have been wrong to push staff out.
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The bank now has to resume the programme as profits fall and economic forecasts point to a challenging time ahead, Quinn said, adding that he had asked senior executives to look at ways to cut costs in the second half of the year.
Shares of HSBC have fallen 27% since the start of March, with the pandemic prompting the lender to set aside $3 billion in bad loan provisions in its first quarter earnings.
Under the restructuring plan first announced in February, HSBC said it would merge its private banking and wealth business, cut back its European equity business, and reduce its U.S. retail network, with the aim of cutting $4.5 billion in costs.
"The reality is that the measures and the change we announced in February are even more necessary today," Quinn said.

HSBC lays off 150 employees from India back offices for 'realignment'

British lender HSBC has laid off 150 employees supporting global operations from back offices in India as part of a global move of "realigning" operations, sources said on Thursday.
Job impacts at HSBC are "less than 150" and this is a part of "realignment as part of ongoing operations" at the lender, which employs 2.38 lakh people globally, the sources said.

The layoffs were are at the mid-management level at HSBC centres in Pune and Hyderabad, they said. The bank employs over 15,000 people at its back offices, called as 'global capability centres', in the country.
A bank spokesperson said, "HSBC is continually reviewing the shape of its workforce to ensure it can best serve its customers and other stakeholders." The job impacts have happened due to a variety of concerns, including projects, individual performance and also redundancies, the sources said.
A media report on Thursday had pegged the total number of job losses at 200.
The move comes at a very difficult time domestically, where there are concerns on whether the ongoing economic growth slump would permeate into impacting jobs.

Investors should forget white noise like polls, pad up for bull run: HSBC

Investors should forget white noises such as elections and trade wars, and buckle up for the next bull run, HSBC has said in a note.
“Many of the elements required for a sustained bull run are now in place. Sectors that have done well in past bull markets — such as banks, and some recent laggards, consumer discretionary, metals, energy and real estate — look well positioned,” the brokerage said in a note authored by analysts Amit Sachdeva, Anurag Dayal, and Herald Van der Linde.

HBSC has analysed key drivers for Indian equities over the past 20 years and applied it to the current state of the market. India has seen five bull markets, four bear markets, and six periods of temporary weakness over the past two decades. Our verdict is that most of the necessary elements are now in place for the start of a bull run, says HSBC, which recently upgraded its stance on the Indian markets from “neutral” to “overweight”.
“Valuations are well within the boundaries of the peaks and troughs of past bull and bear cycles. The earnings outlook for FY19 and FY20 is the highest in the region. Macro indicators, such as inflation, GDP growth, bond yields, and crude oil prices, also paint a positive picture,” said the note.
Last year, the Indian market averted entering the bear territory. The benchmark Nifty came off as much as 15 per cent between September and October. After bottoming out in October, the 50-share index is currently up 13 per cent from 2018 lows.
HSBC has listed several reasons behind improved sentiment towards domestic equities. It says inflation has been persistently low and is expected to remain stable, which would warrant another rate cut by the Reserve Bank of India in April. Also, India’s economic growth will remain healthy and among the fastest in the region.
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On the global front, US bond yields have softened significantly and crude oil prices are “within the tolerance level,” it says.
In the past, rising bond yield and crude prices had led to turmoil in the Indian market. HSBC says India’s valuations are no longer excessive and most sectors are trading well below their five-year average. The benchmark Nifty currently trades at about 17 times its estimated one-year forward earnings.
Also, on the back of tepid flows over the past two years, the Indian markets are “quite under-owned by foreign institutional investors,” it points out. HSBC is the most bullish on the financial sector with Axis Bank, IndusInd Bank, HDFC Bank and Bajaj Finance being the key picks.
“Banks have outperformed almost every time the market has moved out of a bear market,” it says.
Besides financials, consumer discretionary (favoured stocks include Asian Paints, Kajaria Cements and Jubilant Foodworks); real estate (Godrej Properties and Prestige Estates); consumer staples (Avenue Supermarts and ITC); and energy (Gail and HPCL) are among the sectors the brokerage is positive on.
HSBC, however, has stated that the bull market prognosis is its non-consensus view. Also, there are key risks to the assumption.
“The deteriorating macro picture, such as a steep rise in inflation, any large-scale escalation in geopolitical tensions, a slowdown in global growth, or a sharp rise in crude prices,” are key risks, it says.

How the security probe of Huawei set off an international incident

It was a message that federal authorities had grown accustomed to hearing: The global bank HSBC belatedly realised it had been processing financial transactions that might have run afoul of American law.
HSBC had repeatedly been penalised for helping clients launder money. Now, though, there was a different problem. From 2009 to 2014, HSBC helped the Chinese telecommunications giant Huawei move money in Iran, in breach of United States sanctions. This time, the bank said, it had a good excuse: Huawei, and one of its top executives, tricked HSBC into handling the business.

This month, the matter exploded into an international incident that shook global financial markets and threatened to deepen tensions between the American and Chinese governments. Meng Wanzhou, Huawei’s chief financial officer and a daughter of the company’s founder, was arrested in Vancouver by Canadian authorities who were acting at the behest of American prosecutors.
The details of the criminal charges against Meng, filed under seal, remain murky. But court filings in Canada and interviews with people familiar with the Huawei investigation show that the events leading to her arrest were set in motion years ago.
They grew out of an Obama administration national security investigation into Chinese companies — including Huawei — that act as extensions of the country’s government, according to the people familiar with the investigation. The focus only recently shifted to whether Huawei, and specifically Meng, deceived HSBC and other banks to get them to keep facilitating business in Iran. Former federal prosecutors said pursuing Meng, 46, for alleged bank fraud proved to be a better line of attack than trying to build a case on national security grounds.
American national security experts believe China has bolstered its economy — now the world’s second largest — by stealing corporate, academic and military secrets. Among the concerns is that Chinese telecommunications equipment could be used to spy on American citizens. The top United States intelligence agencies told senators this year that Americans should not buy Huawei products.
Counterintelligence agents and federal prosecutors began exploring possible cases against Huawei’s leadership in 2010, according to a former federal law enforcement official. The effort was led by United States attorney’s offices in places where Huawei has facilities, including Massachusetts, Alabama, California, New York and Texas.
As they investigated Huawei, FBI agents grew concerned that company officers were working on behalf of the Chinese government, according to current and former federal officials.
But criminally charging Huawei or its executives for espionage or other security crimes was not likely to be simple. Former federal prosecutors said doing so often risked exposing the sources of confidential information. As a result, they said, prosecutors often look to bring more conventional cases involving crimes such as bank fraud. Think of it as the Al Capone strategy: Prosecutors went after the notorious gangster by charging him with tax evasion.
That is where HSBC came in.
Since at least 2009, Huawei had been a client of the bank. In 2013, a report by Reuters revealed that Huawei, through a subsidiary called Skycom, had been secretly doing business in Iran — a country subject to stringent international sanctions.
HSBC asked Huawei if the Reuters report was true. It was a big concern for the bank, because the previous year federal prosecutors had accused it of willfully failing to stop money laundering by customers, including in countries like Iran. To settle that investigation, HSBC had paid a $1.9 billion fine, entered into a deferred prosecution agreement and agreed to have a court-supervised monitor installed inside the bank.
While American companies are legally restricted from doing business with people and institutions in countries under United States sanctions, nothing stops Huawei from doing so. But if an international bank like HSBC moves money through the United States on its way to or from Iran, that potentially violates American law — which is what HSBC executives were apparently worried about with Huawei and Skycom.
Huawei sent Ms. Meng — a daughter of Huawei’s founder, Ren Zhengfei — to try to assuage HSBC’s concerns. In August 2013, she gave a PowerPoint presentation to HSBC officials in which she denied that Huawei was connected to Skycom. She also said Huawei had complied with American sanctions and would not use HSBC for any transactions in Iran, according to Canadian court filings.
While Meng’s presentation was in Chinese, Huawei later sent an English version to the bank.
“HSBC has been working with Huawei for a long time and has a deep understanding of Huawei’s history of growth around the world,” the presentation said. “We have been and will continue to be transparent.”
The presentation was kept on file at HSBC. Several of the bank’s risk-assessment committees relied on it to justify continuing to do business with Huawei. By 2014, the bank had unwittingly cleared more than $100 million in transactions with Skycom in Iran, according to federal prosecutors.
In 2015, HSBC appeared to have a change of heart about doing business with Huawei. The bank’s reputational risk committee met in New York on April 15 and decided not to do business with Huawei’s American subsidiary.
The next year, the United States accused ZTE, another large Chinese technology company, of operating in countries that were under sanctions. As part of that case, American officials released internal ZTE documents in which executives had described creating “cutoff companies” that would do business in places like Iran and North Korea.
In the documents, the executives said ZTE should follow the example of a rival company, called F7. American officials concluded that was a reference to Huawei, prompting them to intensify their scrutiny of the company, according to a senior Obama administration official.
By early 2017, HSBC and the court-appointed monitor inside the bank had disclosed the Iran transactions to federal prosecutors in Brooklyn, according to a person briefed on aspects of the federal investigation. HSBC provided the prosecutors with Ms. Meng’s 2013 PowerPoint presentation.
HSBC said this week that it was cooperating with the government and was not under investigation itself.
In April last year, Huawei learned of the investigation when prosecutors subpoenaed one of its American subsidiaries, according to the Canadian court documents.
Federal prosecutors concluded that Huawei secretly controlled Skycom and used it to dodge international sanctions in Iran from 2009 to 2014.
This summer, the prosecutors decided to file criminal charges against Ms. Meng — fulfilling their yearslong goal of going after Huawei executives for allegedly acting as an extension of the Chinese government.
Prosecutors filed the charges, under seal, on Aug. 22, and a federal judge in Brooklyn signed a warrant for Ms. Meng’s arrest. The charges focused, at least in part, on her allegedly tricking at least four banks, including HSBC and Standard Chartered, into facilitating the company’s Iranian transactions.
While Ms. Meng’s main home is in Shenzhen, China, she regularly traveled to Canada; she and her husband own two houses in Vancouver. The authorities figured it was only a matter of time before she traveled there, and the United States and Canada have an extradition treaty.
On Dec. 1, Ms. Meng flew from Hong Kong to Vancouver International Airport, where she stopped for a 12-hour layover before flying to Mexico. As she got off the plane, the Canadian police arrested her.
The US is seeking her extradition, but federal prosecutors haven’t unsealed the charges against her.
Much of what is known about the charges comes from a three-page letter that the Brooklyn prosecutors sent to their Canadian counterparts on Dec. 3. Court filings by the Canadian authorities largely rely on the facts provided by the United States. The filings were made public during Ms. Meng’s bail hearing this week.
In their three-page letter, the prosecutors argued that Ms. Meng had lied to banks about Huawei’s connections to Skycom to keep doing business in Iran. They said her 2013 presentation to HSBC “contains multiple material misrepresentations as to the nature of Huawei’s business in a high-risk jurisdiction.” A spokesman for the United States attorney’s office in Brooklyn declined to comment.
On Tuesday, a Canadian judge released Ms. Meng after she posted about $7.5 million in bail and submitted to strict electronic surveillance.
Federal authorities have 60 days from Ms. Meng’s arrest to file extradition papers in Canada.
David Martin, one of Ms. Meng’s lawyers in Canada, did not respond to requests for comment. During the bail hearing, he said Ms. Meng’s presentation to HSBC had been prepared by Huawei’s legal team.
He said his client was innocent and planned to fight extradition.
In the meantime, her arrest has injected Ms. Meng, a mother of four, into the middle of a multifaceted tug-of-war between the United States and China.
President Trump said in an interview with Reuters on Tuesday, “If I think it’s good for what will be certainly the largest trade deal ever made — which is a very important thing — what’s good for national security — I would certainly intervene if I thought it was necessary.”
In China, online chat forums and social media are buzzing with ire toward the United States and Canada. The Global Times, a nationalistic Chinese media outlet, has floated the idea of a boycott of Canadian tourism and products like Canada goose jackets.
Alexandra Stevenson, Kate Conger and Edward Wong contributed reporting.

HSBC upgrades Indian equity market to 'stable' from 'underweight'

Global financial services firm HSBC has upgraded its rating on Indian equity market to “neutral” from “underweight” on the back of recent corrections and more attractive valuations.
Analysts at the bank have noted that since August-end, the Indian stock market has underperformed due to an array of headwinds, such as a free fall in the rupee and a volatility in crude oil prices, and that these risks still persist despite the underperformance. However, "investors’ weights in India are now at historically low levels and there is an opportunity to add to this," Livemint reported, quoting HSBC as saying in the note.

Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness. As a result, the rupee has shown a sharp recovery. At 01:23 pm, the domestic unit was trading at 70.89 against the US dollar. The unit has depreciated to as much as 74.48 this year.
HSBC noted that in the past elections were key catalysts for performance and it was likely to become more important.
They observed that MSCI India EPS (earnings per share) growth consensus expectations were for 18.8 per cent in 2018 and 24 per cent in 2019, which meant India was one of the fastest-growing markets across the region.

In a first for India, HSBC makes overseas payment for RIL via blockchain

In a first for India, British banking major HSBC has executed a trade finance transaction involving an export by Reliance Industries to an American client using the blockchain, which massively reduced the time taken for processing the documents.
The blockchain-enabled letter of credit transaction facilitated a shipment between Reliance and the US-based Tricon Energy, a joint statement issued by HSBC India and Reliance said.

"The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant seven-ten days to less than a day," RIL joint chief financial officer Srikanth Venkatachari was quoted as saying in the statement.
The blockchain platform was integrated with the electronic bill of lading (eBL) platform to issue and manage an electronic bill of lading, it said, adding this allows a digital transfer of the title of goods from the seller to the buyer in the underlying trade.
The statement claimed that the solution is a significant improvement for any organisation involved in buying and selling goods internationally, as it brings together all parties onto one platform.
Blockchain solutions is a distributed database that maintains a continuously-growing list of ordered records called blocks and is deemed to be very transparent as all the stakeholders can view progress real time.
A slew of domestic lenders, including ICICI Bank, SBI and Yes Bank among others are working on blockchain solutions and count trade finance as one of the best use cases for the technology because of the ability to cut down on time.
HSBC's head of global banking and markets Hitendra Dave said blockchain has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster.
That apart, it can ensure cost-effectiveness, quicker turnaround and also potentially unlock liquidity for businesses, he added.
For this transaction between Reliance and Tricon, the LC was issued by ING Bank, Brussels for Tricon Energy US with HSBC India as the advising and negotiating bank for Reliance, it said, claiming the how the transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation.
Explaining the current system, it said at present buyers and sellers use paper-based LCs to underpin transactions and physical documents are sent to each party in the transaction by post, courier or fax.
While the current system provides a high level of certainty, the time and cost involved in processing the documents are deterrents for exporters.
HSBC said it, along with five other banks globally supporting the 'Corda application', is seeking to expand the network on an open source basis to drive adoption across the industry.

Two out of three Indians do not save regularly for retirement: HSBC report

Only a third in India are regularly saving for their retirement while just 33 per cent of working-age respondents globally are putting anything aside for their later life, according to a report.
The lack of saving is likely linked to low knowledge of how much money is needed in retirement, as well as many prioritising their immediate financial situation over planning for their older years, according to HSBC's the 'Future of Retirement: Bridging the Gap' report.

"For many, retirement is thankfully no longer a short period tacked on to the end of our life. It can be a long and very fulfilling part of a person's life. "But with that, our needs at 65 can be very different from our needs at 75 or 85, with very different financial implications," HSBC India head of retail banking and wealth management Ramakrishnan S said.
The research for this report was carried out online by Ipsos on behalf of HSBC among 16,000 adults in 16 markets, including Australia, Argentina, Canada, China, Malaysia, Mexico, Singapore, Taiwan, France, Hong Kong, India, Indonesia, Turkey, UAE, UK and USA.
It revealed that only 19 per cent of working age people are saving for future nursing or care home fees. This is despite half (51 per cent) respondents claiming to be concerned about affording residential care when in retirement, it added.
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Meanwhile, the report found that over half of working-age people (56 per cent) are living on a day-to-day basis financially, while a further 53 per cent only save for short-term goals.
Almost half (45 per cent) also admit they prefer spending on enjoying today rather than saving for tomorrow, it added.
The lack of saving may also be linked to many people not considering their older years as 'retirement' at all, with over two-thirds of working-age people (69 per cent) expecting to continue working to some extent and more than half (54 per cent) hoping to start a business or new venture, it said.
When it comes to knowing the amount of money they will need in retirement, almost two-thirds (65 per cent) of working-age respondents said they were aware of the cost of typical residential home fees.Also, the report revealed that this is leading a generally positive view of retirement across the globe. Most working-age people are looking forward to greater freedom away from the nine-to-five (76 per cent), taking up new hobbies and interests (72 per cent) and getting fit (68 per cent), it added.