HSBC mulls close or sale of Malta branch

Updated with company announcement of HSBC Malta.

HSBC is looking into whether it should close or sell its operations in Malta as part of an ongoing restructuring plan that will see the bulk of resources of the global bank return to its Asian roots.

Malta, together with Bermuda, the Philippines and New Zealand, form part of a long list of non-strategic countries that are being reviewed by HSBC to see if any of those divisions can be sold or closed, according to a report by the Financial Times.

Previous efforts to sell were hampered by a lack of buyers acceptable to local regulators, sources told the newspaper.

This comes about as the HSBC board is working on the biggest restructuring in the bank’s 155-year history after deciding that the coronavirus crisis required more drastic measures.

The pandemic led to the bank pressing the pause button on plans, announced in February, to cut 35,000 jobs, $4.5 billion in costs and $100bn of risk-weighted assets by radically shrinking its US and European businesses and investment bank.

However, the new restructuring strategy aims to include further cuts or possibly sell its US business alongside its retail network in France and operations in smaller non-strategic countries.

The Financial Times refers to senior sources who said that some of the marginal businesses that were previously given the benefit of the doubt were being re-examined.

The bank’s US business is under particular scrutiny, which shrunk by almost a third in February, but management was discussing whether the US operation is viable at all.

US profits fell 39 per cent last year and it made a return on tangible equity — a measure of profitability — of just 1.5 per cent. That compares with a 15.8 per cent return in Asia and 12 per cent in the Middle East.

In fact, the picture painted by the HSBC’s first-quarter results, which were affected by COVID-19, was a dismal one. Profits fell by half after the bank boosted reserves against potential bad debts fivefold to $3 billion.

In a company announcement on the Malta Stock Exchange, HSBC Bank Malta said: “As has been the case in the past, the bank’s media policy is not to comment on speculative stories”.