Does HSBC need its US business? Bank says yes, some investors call for a break-up

Name: HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus
Uploaded: 2020-09-02T23:30:13.000Z
Duration: 2 min 5 s
Description: HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus

Navigating worsening US-China relations, CEO Noel Quinn says there is still a place for global international banks with large footprints

Some brokers in Hong Kong have called for HSBC to focus on its Asia business over other troubled markets

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HSBC remains committed to the reshaping of its underperforming US business, even as tensions rise between Washington and Beijing. Photo: K.Y. Cheng

Chad BrayandEnoch Yiu

Published: 7:30am, 3 Sep 2020Updated: 10:26pm, 3 Sep 2020

HSBC famously declared itself the “world’s local bank” in an advertising campaign in 2002 under then-chief executive Keith Whitson, touting its local knowledge in 81 countries across its global network.

The ad campaign is long gone, but Europe’s biggest lender by assets continues to take pride in its vast international footprint, despite generating the bulk of its profit in Asia.

That international focus placed the London-based HSBC in an uncomfortable tug of war as tensions rose between the US and China. The frictions have prompted some investors to question why Hong Kong’s biggest currency-issuing bank is still operating in the US at all.

The US business has been a “monumental headache” for HSBC for years, forcing the lender to spend billions of dollars on compliance to stay on the right side of US regulators, said Francis Lun Sheung-nim, chief executive of Geo Securities in Hong Kong. The bank should be split in two, between its Asian operations and the rest of the world, he said.

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HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus

That headache was recently amplified by a controversial national security law enacted by Beijing on Hong Kong in June, which provoked a global backlash. HSBC has been rebuked for its support for the law, and was later accused by the US Secretary of State Mike Pompeo of continuing to do business with officials sanctioned over the law.