HSBC Probes China Pinnacle Wealth Business On Costs And Control

HSBC Holdings Plc is reviewing expenses and operational controls at its China digital wealth business Pinnacle, a move that could result in layoffs and mark an abrupt reversal of the lender's ambitions for the unit, several sources said, Selena Li, Engen Tham, and Sumeet Chatterjee reported for Reuters.

HSBC is examining Pinnacle's staff salary structures and investigating whether suppliers inflated expenses, contributing to a sharp spike in costs that outpaced revenues. I Photo: Tom Mascardo Flickr

As part of the review, the lender is examining staff salary structures and investigating whether suppliers inflated expenses, contributing to a sharp spike in costs that outpaced revenues, according to five sources familiar with the matter.

The review, which has not been previously reported, started a few months ago, the sources said, requesting anonymity because the conversations are confidential. The review could result in layoffs, two of the sources said.

The bank plans to complete the review by the end of this year, one of them noted.

A downsizing of Pinnacle, which was launched in 2020 and sells insurance and fund products, would be a setback for Europe’s largest lender by assets, which has doubled down on Asia while divesting from less profitable businesses elsewhere.

Under its new CEO, Georges Elhedery, HSBC, which makes the bulk of its revenues and profits in Asia, has been looking to rein in costs, with the bank bracing for revenue to take a hit as major central banks start cutting interest rates.