NewMaking the cut: StanChart, HSBC race to slash costs seen stumbling
HSBC has more than four years of restructuring on its rival and analysts say at least the bank has a clear plan. Standard Chartered’s master plan is missing
Standard Chartered and HSBC are in full sprint to cut down costs but their third-quarter earnings reports this week may show the banks running in place.
HSBC is far ahead of its cross-town rival in marking out a route for cutting down costs. But that’s not saying much given that Standard Chartered has left investors only a few clues as to its next master restructuring plan under new leader Bill Winters.
HSBC, Europe’s biggest bank, has just set off on the latest leg of its strategy to exit bad businesses and reinvest assets in faster-growing markets . The course is a long one and analysts worry that while the bank has been seen slashing back and forth with a cleaver to cut costs, it might not be making contact in the right places.
The exit targets for HSBC against the current dismal economic backdrop are lacking, analysts pointed out.
“The bank is surely struggling right now with global credit demand muted and rates being pushed out,” Chirantan Barua, a senior analyst at Sanford C Bernstein in London, said in a note. “There is only so much cost you can cut.”
Questions on what can be cut have been matched with similar one on where such a heavy load of risk-weighted assets can be reinvested. The bank has said it wants to cut US$290 billion in risk-weighted assets and redeploy up to US$190 billion into fast-growing markets such as southern China and Southeast Asia. Investors and analysts have questioned if that plan, aimed at a cooling Asia, might be overly ambitious.