Is HSBC retail competitive enough to keep 6000 jobs? (Foreign Banks in India)

HSBC is one of the strongest franchises in Asia and despite its global mandate of cutting 30,000 jobs in line with saving $3.5 bln and getting Cost income ratios back to below 50%, its staff in Asia has been pretty optimistic and straightforward in its plans to grow in the region. HSBC therefore is probably recruiting nearly 15,000 people in Asia this year As a close observer and follower of the bank I remain for example among probable candidates, the bank and very few of its competitors can choose from while recruiting in Asia. Deutsche Bank in Singapore and StanC and Citi in India and China remain other Regional Brands that feature as  Top employers. DB and these others even recruit continuously for their offices in London, New York and /or elsewhere in Asia from India not just internally but thur external hiring programs.

Despite the continuing strengths of Asian markets where a slow India and China still guarantee a near 8% growth for the region, many banks like StanChart , Citi and HSBC have found their own challenges with their 100 branch networks in India and even smaller ones in China. While new Chinese Yuan business for mainland companies and international investors has grown business in Hong Kong and somewhat in mainland China itself, Indian business for these banks has started in a renewed manner just last month with new focus on quality unsecured loan portfolios and continuing cash flow from Corporate Investment Banking businesses in India.

HSBC’s competition comes from entrenched players in its strong suit of Investment Banking. StanChart for example is part of almost ever outgoing FDI business from India including the two latest purchases by GVK GVK is probably considering buying more of Bangalore Airport from Siemens for control of BIAL and is also getting ready to spend nearly Rs 100 bln on a purchase of Australian Hancock mines for assured coal supply to its power projects under GVK PIL However that is another tale to tell.

HSBC also has achieved breakeven in its 50 branch retail operation and the investment in quality and service may yet return higher value towrds its 2013 goal of earning $1 bln from the region in profits. however, its 6000 employees may yet be on the chopping block and/or the bank may find it difficult to assimilate the army of private bankers and retail employees with its acquisition of ABN AMRO/RBS in India completing this year.

The competition in india in retail is varied and diversified. For example Religare may lead in retail broking despite HSBC’s big ticket acquisitions, Credit Suisse and Barclays still aggressively hiring in Research and investment Banking despite having been showing optimism on their emerging markets desk for over 3 years and not achieving probably as much as they wanted. HDFC Bank leads in Car loans from another era but the flight to quality may bring a new leader. ICICI Bank may no longer lead in retail high value mortgages but with a new Fixed / floating hybrid product it may yet walk a mile ahead of its competition in sales and as usual its skimping on spending on the service value chain for the customer may work as tactical strategy till quality issues sink it again.

Citi is going to be starting at a disadvantage however and thus i doubt if Stuart Davies would be in a hurry to cut his well established team as the Indian market again readies itself for a battle in retail deposits and lending, this time for the pie that is profit and not just Sales.