An HSBC bank in New York, on Aug. 7, 2019.Brendan McDermid/Reuters
HSBC announced on Wednesday a possible sale of its New Zealand business and plans to close 114 branches in Britain, in the latest retrenchment by the bank as it strives to improve returns amid criticism from a top investor.
HSBC once billed itself as the world’s local bank and built a network of local banking units worldwide. But the cost of operating such subsidiaries and competition from incumbent players in each market have dimmed returns.
Retail banking profits have also come under pressure worldwide from low-cost digital rivals that avoid the expense of running large branch networks.
“Like many organizations, HSBC regularly engages in business reviews to optimize our network operations for the long term,” a spokesperson said, confirming plans to review options for the bank’s small New Zealand business, which could include a sale.
She added the bank’s wholesale banking business in New Zealand would not be impacted by the review.
The news came just a day after HSBC announced the sale of its much larger Canadian business, and the lender has also cut its U.S. and French retail banks in the last two years.
HSBC also said on Wednesday it would close 114 branches in Britain from April 2023, in another sign of how it is trying to slash retail banking costs worldwide to try to improve profits.
The move will leave HSBC with just 327 branches in Britain, down from 625 in 2017 and 965 branches at the end of 2016.
Union Unite criticized the plan, saying 108 of the closures would leave customers with no bank within three miles.
HSBC said it was responding to changing customer behavior, with more people banking online, and that it would invest tens of millions of pounds into its remaining branches.
The lender is now shrinking wherever it sees itself as too bloated, and exiting where it is sub-scale compared to local players, spurred on by pressure from its biggest shareholder, Ping An Insurance Group of China.
HSBC’s business in New Zealand is small, generating a pretax profit of NZ$51-million ($32-million) in 2021, according to a public filing of its accounts.
Bloomberg News earlier on Wednesday reported the review of the New Zealand retail business.