HSBC London
HSBC London
Anastasia Moroz

Anastasia Moroz

Staff writer and journalist at
Anastasia is a staff journalist and editor at Finbuzz covering finance, banking and technology.
Anastasia Moroz

HSBC has prompted May’s government to shed some lights on the stance of EU nationals operating in the UK due to the uncertainty caused by Brexit.

As UK’s major bank reported profits dropped 50% in the first 9 months of the year,the HSBC CEO Stuart Gulliver claimed the prime minister should be given “space” to settle the UK’s leave.

HSBC has 42,000 employees in the UK, of which around 2,000 are coming from the EU.

Gulliver said: “I would say [what is] slightly more urgent is clarity around the status of EU nationals working the UK.”

Before the vote, Gulliver said HSBC could shift 1,000 jobs to Paris if Britain voted for exiting from the EU. On Monday, however,he stated that the bank intends to keep its headquarters in London instead of moving to Hong Kong and does not make hustle relocating its staff.

“We are in a position where we can sit patiently and see what evolves,” said Gulliver.

Due to the loss on the sale of its Brazilian operation as well as a $500m punch for compensatory payments for customers in Britain, mostly the ramification of payment protection insurance mis-selling, the bank’s pre-tax profit this year was only $10.6bn, which is significantly lower when compared to the previous year’s $19.7bn.

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The head of UK equities at Standard Life Investments David Cumming told BBC Radio 4’s Today that while the results were better than predicted, “the key here is we get some outside blood into the organisation to liven up what is perceived as a relatively slow-moving and bureaucratic culture”.

He added: “They won’t thank me for saying that but I think longer term with HSBC they have become a bit too big, a bit too complex to manage effectively.”

The bank has previously made an attempt to conduct modifications at the top by announcing the chairman Douglas Flint departure in 2017. For the first time in HSBC’s history, the successor will be appointed from outside the management team. The identity has not been disclosed yet.

Gulliver, however, was careful revealing the date of his departure, stating the appointment of the new chairman would “dictate on what timescale and by whom I’m replaced and what stage I retire”.

The bank, conducting businesses across 71 countries and having 240,000 headcount all over the world, had warned ahead of Monday’s outcome that the sale of its Brazilian business would result into loss.

In the third quarter, the $1.7bn loss on the sale of the Brazilian business assisted in reducing profits to $843m from $6bn in the same period the previous year.

The sale of the Brazilian bank enabled HSBC to declare its first $2.5 bn share buyback. Analysts are now taking a close look at the bank’s ability to pay dividends after it broke its promise to continue increasing the payouts.

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Analysts at Bernstein said: “We feel this should be enough to allow the bank to maintain the dividend next year out of capital even as earnings decline.”

Gulliver stated that the BoCom stake would not be sold while he is still occupying his post and that the regulator’s approach to its stake in the Chinese bank would facilitate its ability to pay dividends. According to the bank’s scheme, it will be paying $0.51 in dividends a year.

“This is another action forming part of our ongoing capital management of the group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. It also provides us with a significant capacity to manage the continuing uncertain regulatory environment,” said Gulliver.

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