On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

650 AM Hibbing, Minnesota

Weather

Current Conditions(Hibbing,MN 55746)

More Weather »
72° Feels Like: 72°
Wind: SE 0 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Today

Partly Cloudy 77°

Tonight

Partly Cloudy 56°

Tomorrow

Thundershowers 71°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

HSBC targets additional $2-3 billion cost savings by 2016

The logo of HSBC bank is seen at its office in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren
The logo of HSBC bank is seen at its office in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren

By Lawrence White

HONG KONG (Reuters) - HSBC said on Wednesday that it would target additional cost savings of $2 billion to $3 billion in 2014-2016, as Europe's biggest bank cuts jobs and sells noncore businesses to bolster profitability under a restructuring plan led by CEO Stuart Gulliver.

In a strategy update, HSBC <0005.HK> also said it would aim for a cost-efficiency ratio in the "mid-50s", up from 48-52 percent previously, a goal it had been struggling to achieve amid sluggish growth outside Asia. It maintained its long-term target for return on equity of 12 to 15 percent.

The plan set out by Gulliver in May 2011 called for a complete overhaul of the bank by reducing costs, exiting sub-scale or unprofitable businesses and focusing on growth markets. When the 52 sales or disposals of non-core businesses announced since 2011 are complete, HSBC will have cut $95 billion in risk-weighted assets, the bank said on Wednesday.

"We will continue to exert tight cost discipline whilst streamlining processes and procedures," Gulliver said in a statement to the Hong Kong Stock Exchange.

HSBC's restructuring plan also targets generating more income from collaboration between the firm's Commercial Banking, Private Banking and Global Banking and Markets divisions.

The business unit collaboration effort realized $900 million in added revenues between 2011 and 2012, the statement said, with an additional $2 billion in incremental collaboration revenues targeted by 2016.

HSBC also said it would "progressively grow dividends" and introduce a share buyback scheme as it seeks to return value to shareholders.

HSBC has already achieved $4 billion of annualized sustainable cost savings and culled 46,000 staff across the bank, its first quarter results showed last Tuesday.

The bank's shares are up 13 percent since the start of 2011, compared with a 9 percent drop in the European bank index. That has left the bank valued at $210 billion, just ahead of U.S. rival Wells Fargo , making it the third biggest in the world behind China's ICBC and China Construction Bank.

(Reporting By Lawrence White; Additional reporting by Denny Thomas; Editing by Chris Gallagher)

Comments