Hong Kong and Shanghai Banking Corporation (HSBC) is one of the largest players in the Asian banking industry, and has placed itself across the United States, the United Kingdom and Canada alongside. Due to the growing impact of the Corona Virus, the company's profits went down by over one third since 2019, resulting in a reduced global headcount by laying off 15% of their workers. The bank requires a large restructuring plan, and since it has underperformed in U.S markets, they plan to close over a third of their branches and shift them to the Middle East instead. Furthermore, they are shrining their assets by $100 billion, and this restructuring is costing them an added $7.2 billion by 2022. Additionally, the falling interests rates in China have been severely damaging to the financial sector, resulting in several banks rethinking their development strategies. If the virus continues to grow, the bank will face $600 million in further credit losses. Mainland China was a core engine of growth for the country, but now faces deteriorating impacts with many multinational corporations and banks such as Apple facing a decline in their production and performance. Do you believe other banks and corporations will restructure their production plans and geographical placements if the virus continues to grow? If that is the case then how would China's economy recover from this economic downturn without the help of foreign invesmtnets?
https://www.cnn.com/2020/02/18/business/hsbc-results-2019-announcement/index.html
2 comments:
In the case of HSBC, we see a mix of both coronavirus outbreak and political unrest in Hong Kong leading to reduction in profits. Keeping this in mind, Chinese government is trying to contain the impact of coronavirus, to help stabilize their economy. This means people will get back to work and the economy would recover soon.
In response to the impact of the new coronavirus epidemic on the domestic economy, the Chinese government has adopted a series of emergency measures not only injecting billions of dollars into the domestic financial system, raising expectations for interest rate cuts, but also promising to reduce administrative approvals and processes. The government has informed banks to extend the loan period appropriately and has recommended that business owners consider rent reductions.
To prevent the financial system from failing, the People's Bank of China has promised to provide domestic banks with more than $ 40 billion in special loans and injected $ 380 billion into the domestic financial market over the past two weeks. The stock market has thus stabilized.
China's major banks have fully launched online financial services to minimize the impact of the epidemic on daily financial services. Major banks have also introduced many new financial management programs to obtain funds and provide donations to areas affected by the epidemic.
I believe that banks and financial institutions will restructure their production plans and China’s economy will recover, and people will go back to their work and normal life.
Post a Comment