HSBC ‘problem’ spots Brazil, Mexico, US and Turkey have 1-2 years to prove worth: CEO

LONDON - Reuters

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HSBC has given its four problem businesses in Brazil, Mexico, Turkey and the United States as little as one year to prove their worth before “more extreme” turnaround solutions are proposed, its CEO said on Feb. 23.

Chief Executive Stuart Gulliver told analysts he would consider disposals to simplify the bank and improve returns, although he declined to say if any of the four big trouble countries could be sold.

“We’re involved at the moment in fortnightly calls ... on Brazil, Mexico, United States and Turkey, which are clearly the four which present the biggest problems in this regard (improving them),” Gulliver told a conference call after HSBC reported a 17 percent drop in pretax profit.

“We absolutely need to turn them round, or we would need to think of more extreme solutions to the problem.”

Asked how long the businesses had to prove their worth, Gulliver said: “I think we’re talking 12 to 24 months.”

Gulliver said there were also parts of its investment bank and commercial bank that need to improve returns.

“There are parts of the Group that aren’t offering a return that’s anywhere near their cost of equity ... and there are no options in terms of that restructuring that we would not consider.”

The four countries are four of HSBC’s most important. It has 21,000 staff in Brazil, 17,000 in Mexico and 15,000 in the United States and has pinpointed Turkey as one of its priority growth markets.

HSBC reported a 17 percent fall in annual pretax profit and cut its profitability target, saying allegations its Swiss business had helped customers to dodge taxes had brought shame on the bank.

Results from Europe’s biggest bank on Feb. 23 reflected the cost of past misconduct and of protecting itself against the impact of further scandals. HSBC said allegations about its Geneva-based arm, raided last week by Swiss officials and now the subject of a UK inquiry, had badly damaged its image.