Chillin' out till it needs to be funded
HSBC’s investor Day presentation is not out of tune with its marketing campaigns as its Yuan FX desk takes off in London in the Year of the Yuan Dragon. The online video campaigns are well worth a look see whenever you have the time. Coming back to the Performance report for the bank, the bank’s restructuring program’s seem to be struggling , apparently a common theme to all cost cutting and restructuring programmes. Though the bank still manages a distinct ROI and tries to communicate the same in its Simplifying presentation(HSBC Investor Day), it is yet to show a lasting impact on the Cost income ratio as the same fluctuates every quarter between the same earlier range of 54-58
In the bank’s latest communique, it operationalises the simplifying verb ith the same end objective of achieving a Cost Income Ratio of 48-52%, positive jaws and agility from its simplification of operations and reducing of operational risk. The bank is not flatlining profits, instead choosing to flatline the organisation structure from 15 layers to 8, and many of the staff reductions in India have been at those mid senior levels where everyone as reporting to everyone else with the dynamic of the organisations markets and businesses from commercial banking to personal and private banking The minimum span of control is also now 8, the 8X8 tile being the basis of its consistent business model objective.
However the bank’s strategy of reducing focus markets is no up for stricter scrutiny in 2012 and 2013 as it has to show it is at home with its ne structure and business as it happens today across the globe. Q1 2012 has yielded another 4.1k job reductions across globalising of support and risk functions to implementing the reduced management layers. IT and operations have yielded only 700 cuts in 5 quarters surprisingly ( that should include retail front office functions)
The bank also proudly claims to have reduced bank space by 2 m sft and reduced vendors and the number of “initiatives” at the bank . The bank also plans to save USD 300 M in the marketing function, probably signifying a stricter implementation of the global ad agency model this time. On the other hand the bank wants 30 ne initiatives to homogenise and make efficient its 30 call centre processes and almost USD 200 M from Rightshoring IT
The bank also claims another USD 2 B program s in the pipeline including the Marketing IT and BPO rationalisation
The above savings would easily be absorbed by expenditure in the four BRIC economies to become the largest bank in these countries including Brazil and China (when regulatorily possible) or by ringfencing of the local ICB operations in the UK.