HSBC continues to downsize Korean operation
A pedestrian passes by an HSBC branch in London in this 2016 file photo. / EPA-Yonhap
By Park Jae-hyuk
HSBC decided to drop its fund administration services provider, here, to restructure its operation in Korea amid its deteriorating global profits.
According to the U.K. investment bank's local subsidiary, Wednesday, HSBC Asia Pacific Holdings, an indirect wholly owned subsidiary of HSBC Holdings, entered into an agreement to sell its 92.96 percent stake in HSBC Fund Services Korea to Koscom.
“The transaction is expected to be completed within the next six months,” HSBC Korea said in a press release. “The securities services business at HSBC Korea, which provides custody services to institutional investors and trustee services to investment managers, is unaffected by this transaction.”
HSBC, which had started to offer personal finance services here in 1998, has continued to downsize its Korean operation.
In July 2013, the bank said it would stop providing retail banking services in the country. It dismissed more than 200 workers at that time. Since then, it has focused on corporate banking business as the segment is looking more lucrative by dealing with foreign exchange, rates derivatives, global cash management, trade finance, global and direct custody, debt capital markets, equity capital markets and mergers and acquisitions (M&As).
“One of HSBC's strategic priorities is to accelerate growth from our Asian franchise,” HSBC Asia Pacific CEO Peter Wong said. “The sale of our stake in HSBC Fund Services will allow us to focus on our core businesses in Korea, which is a part of HSBC's regional Asian network that support the needs of the group's international client base.”
However, HSBC global banking for Korea head Howard Kim, who was in charge of investment banking and M&A consulting at the local unit, “abruptly” left his company last month causing concern that the multinational bank may seek further cutbacks in the domestic corporate finance market.
Kim, who was regarded as the second-highest figure in HSBC Korea after CEO Jung Eun-young, had been tasked with those duties since HSBC Securities Seoul CEO Kim Do-jin and director Keum Han-chul quit their jobs after showing unsatisfactory performances.
HSBC Korea declined to comment on the resignations.
Operating 3,900 branches in 64 countries, the HSBC global headquarters plans to slash 35,000 jobs globally by 2022.
In February, HSBC interim CEO Noel Quinn confirmed this plan as a part of efforts to cut $4.5 billion worth of costs. He said this represents one of the deepest restructuring and simplification programs in the company's history.
Although the bank put the process on hold in March to avoid dismissing its workers during the lockdowns caused by the COVID-19 pandemic, it resumed in June, as the interim CEO considered the job cuts “more necessary” due to the impact of the pandemic on its profits.
HSBC reported a 65 percent fall in its pre-tax profits for the first half of 2020 to $4.3 billion. This was due to the continuing COVID-19 pandemic, falling interest rates, increased geopolitical risks and heightened levels of market volatility.