HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - HSBC Holdings Tuesday said it will take action to save billions of dollars in costs by 2017, including cutting about 10% of its workforce, building on the costs Chief Executive Stuart Gulliver has already slashed from the group's annual bill, and it will also cut its investment banking division as it aims to bolster returns.

The banking giant said it wants to save a further USD4.5 billion to USD5.0 billion on an annual basis by 2017, with a one-off cost of between USD4.0 billion and USD4.5 billion to achieve those cuts.

The group confirmed it intends to sell operations in Turkey and Brazil, though it will keep a presence in the South American country to help serve large corporate clients.

It will axe between 22,000 and 25,000 full-time employees between 2014 and 2017, not including Brazil and Turkey, from the 258,000 employed in the whole group at the end of 2014, although reductions will be partly re-invested in growth and compliance.

Speaking to analysts at an investor update on Tuesday, Gulliver defended HSBC's international network as a means by which to gain access to global trade and capital flows, arguing that the benefits outweigh the costs of running a global bank.

"HSBC has an unrivalled global position: access to high growth markets; a diversified universal banking model with strong funding and a low risk profile; and strong internal capital generation with industry leading dividends," Gulliver said in a statement.

The chief executive also wants to accelerate investments in Asia, where it wants to expand its asset management and insurance activities. In particular, HSBC sees opportunities in the Pearl River Delta in Guangdong province, China and in the Association of Southeast Asian Nations region, which counts Indonesia, Singapore and Thailand among its 10 members.

Gulliver wants to reduce the emphasis placed on HSBC's investment banking division - global banking and markets - where he wants to reduce risk-weighted assets to less than one-third of the group total. The investment bank's risk-weighted assets, which are more capital intensive - amounted to USD516.1 billion on a Basel 3 basis at the end of 2014, about 42% of the total. Overall, Gulliver wants to cut risk-weighted assets by USD290 billion.

According to presentation slides available through the bank's website, HSBC will use at least 11 criteria to decide on the best location for its headquarters, including economic importance and future growth, the tax system, and government policy. The bank wants to make a decision by the end of 2015.

Gulliver also said HSBC's UK retail bank will be re-branded, although it hasn't yet decided on the brand.

By sharpening the group's structure and processes, Gulliver has already achieved sustainable savings of USD6.1 billion on an annualised (run rate) basis as of the end of 2014, far above the initial USD2.5 billion to USD3.5 billion targeted in 2011.

Still, HSBC shares are down 1.1% at 612.70 pence, making it one of the worst-performing stocks in the FTSE 100 Tuesday.

The Competition and Markets Authority has fast-tracked BT Group's GBP12.5 billion deal to acquire mobile operator EE Ltd to a so-called phase 2 investigation, which involves a deeper probe of the deal because the UK's antitrust regulator is concerned it will hit competition.

In May, BT asked the CMA to proceed directly towards a phase 2 investigation, knowing the regulator was likely to take that decision anyway.

The CMA said Tuesday it has decided it is appropriate to fast track its investigation to a deeper probe as there is a "realistic prospect of a substantial lessening of competition in relation to the supply of wholesale access and call origination services to mobile virtual network operators and fibre mobile backhaul services to mobile network operators in the UK".

"We have found that there is a real risk that the merger could reduce their incentives to supply these inputs and that this could have a detrimental impact on the retail mobile market," CMA Executive Director of Markets and Mergers Andrea Coscelli said in a statement.

"BT and EE have recognised that the issues in this case are complex and that the test for reference at phase 1 would be met. They therefore requested use of the fast track procedure and, after due consideration, we believe this to be appropriate," Coscelli added.

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Markets: UK stocks are lower with Greek debt negotiations taking stage centre, after the Mediterranean country submitted new reform proposals to its international creditors. Reed Elsevier and Anglo American are the best and worst performers in the FTSE 100, respectively, moving on broker rating changes. The pound is down against the dollar despite data showing the UK trade deficit shrinking by more than expected to a 13-month low in April.

Futures point to a lower open for US stock indices, with the DJIA and S&P 500 both currently indicated down 0.1% and the Nasdaq 100 set to open down 0.3%.

FTSE 100: down 0.2% at 6,777.37
FTSE 250: down 0.1% at 17,861.59
AIM ALL-SHARE: flat at 773.72
GBP: down at USD1.5319
EUR: flat at USD1.1275
GOLD: up at USD1,182.67 an ounce
OIL (Brent): up at USD64.33 a barrel
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Other Top Corporate News
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WPP said its revenue in sterling for the first four months of 2015 rose 8.0% and reiterated its guidance for 2015. Revenue was boosted by the weakness of the pound against the dollar, but this was partly offset by its strength against the euro. At constant currency, revenue rose 7.1% for the four months ended April, the company said in a statement alongside its Annual General Meeting. This compared with a 7.4% rise in the first quarter. The company said that sales growth was marginally softer in April, as parts of its advertising, data investment management and branding and identity businesses were slightly slower, although against a very strong comparative in the previous year.
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Old Mutual is preparing to sell a further stake in OM Asset Management, the boutique asset manager it spun off in a float on the New York Stock Exchange in the autumn of 2014. Old Mutual said it will used the proceeds of the sale for general corporate purposes. The pricing of the offering has yet to be determined, with the number of shares to be sold by Old Mutual also still to be determined. The offering is to be made through global coordinators and joint book-running managers BofA Merrill Lynch, Morgan Stanley, Citigroup, and Credit Suisse.
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South32 said it has decided to delay restarting three of the four high-carbon ferromaganese furnaces at its joint venture operation in South Africa with fellow mining giant Anglo American. South32, a recently created spin-off company from BHP Billiton, said it made the decision to delay the restart of the furnaces at the South African Samancor manganese joint venture due to the decline in high-carbon ferromanganese prices, which have continued to decline in 2015.
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Sky Deutschland said the cash compensation payable to minority shareholders for the transfer of their Sky Deutschland shares has been set at EUR6.68 per share. This follows the completion in November 2014 of Sky PLC's offer for Sky Deutschland and the announcement in February that, as the holder of 96.05% of the shares in Sky Deutschland, Sky was initiating the squeeze out of the remaining 3.95% minority shareholdings. The squeeze out resolution will be approved at an Extraordinary General Meeting of Sky Deutschland scheduled for July 22.
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Vedanta Resources shares are up as after it noted press speculation about potentially merging its subsidiary Cairn India into itself. The company did not comment on the speculation, but said it "will make appropriate disclosures as and when required". Vedanta already holds a majority 59.8% stake of Cairn India, which has been subject to turmoil in recent months over tax demands issued against the company by Indian tax authorities related to the period when Cairn India was owned by a Cain Energy subsidiary. Cairn Energy still holds a 9.8% stake in Cairn India.
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Just Eat said 41.33% of the shares available under its recently-announced open offer were taken up, and the remainder have been placed so that it raised about GBP445 million to fund the company's acquisition of Menulog Group. The company announced the open offer and placing last month and the open offer closed on Monday. It got valid acceptances for 43.6 million shares under the open offer, and the remaining 61.8 million in the offer were taken up under its placing.
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RPC Group reported higher profits and earnings for its last financial year, helped by acquisitions, and said the current year has got off to a satisfactory start despite adverse exchange rate movements and a time lag in passing through higher polymer prices. The plastic products designer and maker reported a pretax profit for the year to March 31 of GBP67.1 million, up from GBP59.0 million a year earlier, as revenue increased to GBP1.22 billion from GBP1.05 billion. Its closely-watched pretax profit excluding restructuring, impairment charges exceptional items rose to GBP119.0 million from GBP89.5 million. It raised its full-year dividend to 15.4 pence from 13.8p.
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Private equity firm Kohlberg Kravis Roberts sold a further 108.0 million shares in Pets at Home Group, a 21.6% stake in the pet product retailer it listed last year, at 267 pence per share. BofA Merrill Lynch, the bookrunner on the accelerated bookbuild placing, said that KKR's sale of the 21.6% stake the company raised about GBP288 million for the private equity firm. KKR will hold a 24.6% stake in Pets At Home on completion of the placing.
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AIM Movers
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Bacanora Minerals shares are up strongly in London despite the company saying it knows of no reason for the sharp increase in its share price in Canada overnight. Its stock rose 46% to CAD2.05 on the TSX Venture Exchange overnight. Porta Communications is doing well after it said Chairman Bob Morton acquired 6.3 million shares at a price of 7 pence per share through Hawk Investments Holdings, a company beneficially owned by Morton and his wife. Private & Commercial Finance Group is up after it said it wants to restructure its balance sheet in a move to enable the payment of a dividend to shareholders. Croma Security Solutions Group is another gainer after it won three new contracts in the UK, including a further three-year deal worth between GBP1.1 million and GBP1.2 million to provide maintenance, servicing, installation and upgrade work for ODEON cinemas. It signed a further five-year contract with Hilton Hotels to continue routine maintenance of its revenue parking systems and servicing, and won a deal to install a secure Fastvein biometric access control system into "the second largest Bank in the UK", working in partnership with Hitachi, for an undisclosed value. Deltex Medical Group is up after it said that a US hospital in which its oesophageal Doppler monitoring technology has been introduced has now made it part of its enhanced recovery protocol for all colorectal surgery and could expand it to other areas such as urology and gynaecology. Beowulf Mining shares have lost about half of the 30% gain made Monday when it said it has produced "super high grade" concentrates from the Kallak North iron ore prospect in northern Sweden that will benefit from higher prices. On Tuesday, Beowulf said it issued just over 2.0 million new shares to three of its directors, a deal that follows the board's decision last October to take some of their salary and fees in shares instead of cash.
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Top Economics And General
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Greek stocks are rallying on hopes of a breakthrough after the government submitted a new reforms proposal to its creditors to avert a cash crunch. "Diverse proposals are being circulated, including new suggestions which were received earlier this morning," European Commission spokesman Margaritis Schinas said. He added that the suggestions would be assessed on Tuesday "with diligence and care" by Greece's creditors - the commission, the European Central Bank and the International Monetary Fund.
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The UK trade deficit narrowed by more than expected to a 13-month low in April, figures from the Office for National Statistics showed. The visible trade deficit narrowed by GBP2.1 billion to GBP8.6 billion in April, the smallest shortfall since March 2014. This was also the largest monthly fall in the deficit since June 2013. The deficit was forecast to narrow to GBP9.9 billion. Exports rose GBP0.7 billion, while imports declined GBP1.5 billion from the prior month.
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The Eurozone economy grew as initially estimated in the first quarter underpinned by widespread contribution from all sub-components. Gross domestic product expanded 0.4%, in line with the estimate published on May 13. The 19-nation currency bloc grew by revised 0.4% in the fourth quarter and 0.2% in the third quarter of 2014. On a yearly basis, economic growth improved to 1% from 0.9% a quarter ago. The annual growth rate also matched flash estimate.
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US President Barack Obama called on both sides in Athens' debt talks to show flexibility to end the crisis, but he joined Merkel in calling on cash-strapped Greece to introduce tough economic reforms. Greece and its international creditors must show "sufficient flexibility" in order to end the country's economic crisis and head off the threat of Athens defaulting, the US leader told a press conference marking the end of Group of Seven summit in southern Germany. Athens' battle to secure a deal with its creditors to unlock much-needed cash in exchange for reforms has emerged as a key issue at major international meetings, including the two-day G7 leaders summit. In her comments at its conclusion, Merkel said the G7 leaders wanted to see Greece remain a eurozone member state. But she warned that time was running out for the nation to conclude a deal with its creditors - the International Monetary Fund, the European Central Bank and Athens' eurozone partners.
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Ukraine on Monday prohibited Russian troops from entering or leaving the breakaway Moldovan region of Transnistria via neighbouring Ukraine. This gravely isolates landlocked Transnistria, which has functioned as a de-facto autonomous state since the early 1990s with crucial economic and military support from Russia. Now air travel seems to be the Russian military's only mode of transportation to the region, which Moldova considers illegally occupied by Russia.
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South Korea is engaged in an "all-out" effort to eliminate Middle East Respiratory Syndrome, the government was reported as saying Tuesday, as the death toll from the outbreak edged higher. A seventh death and eight more cases of infection were reported Tuesday, nearly three weeks after the outbreak began, Yonhap News Agency reported. "This week may be very crucial to overcoming MERS," acting prime minister Choi Kyung Hwan told reporters.
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Afternoon Watchlist (all times in BST)

13:55 US Redbook index
14:00 US NFIB Business Optimism Index
15:00 US JOLTS Job Openings
15:00 US Wholesale Inventories
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Wednesday's UK Corporate Events

First Group - Full Year Results
Hansa Trust - Full Year Results
Castings - Full Year Results
Flybe - Full Year Results
J Sainsbury - Q1 Trading Statement
Zambeef Products - Half Year Results
Boohoo - Trading Update
Shoe Zone - Half Year Results
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Wednesday's Key Economic Events (all times in BST)

All Day EU G7 Meeting
00:50 Japan Domestic Corporate Goods Price Index
00:50 Japan Machinery Orders
07:45 France Industrial Output
09:30 UK Manufacturing Production
09:30 UK Industrial Production
12:00 US MBA Mortgage Applications
15:00 US Business Inventories
15:00 UK NIESR GDP Estimate
15:30 US EIA Crude Oil Stocks change
19:00 US Monthly Budget Statement
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