Tomahawk, WI 08/05/2014 (Basicsmedia) – HSBC Holdings plc (ADR) (NYSE:HSBC) has expressed its frustration for lack of continuity in terms of regulators among the global regulators especially in businesses where the company is facing immense competition from other players in the industry. HSBC is currently competing with the likes of and Citigroup Inc. (NYSE:C) all of whom have different regulators, raising concerns in terms of the different costs that all of them are charged. HSBC maintains that the costs charged should be similar, to ensure a level playing field
“So HSBC competes with the likes of DBS group, Mitsubishi Citigroup a Mitsubishi UFJ Financial Group Inc. (ADR) (NYSE:MTU) and all of this have different regulators. So if you are competing for certain businesses and you have to hold a certain amount of capital for certain asset and the competitor can hold x minus 20% where you are at your competitor’s disadvantage, so that’s where the frustration is coming from, Said Bill Fitzpatrick” Senior global Equity analyst, in an interview on CNBC.
Fitzpatrick expects more clarity to be evident as the year nears the close as asset review quality are expected to be made public by the European central bank and PRA, which regulates HSBC. The frustration came as HSBC reported $9.5 billion profit for the first six months of the year despite client appetite being tight.
HSBC Holdings plc (ADR) (NYSE:HSBC) is in the business of financing transactions for clients and organizations in the risk spectrum, highly relying on the movement of short-term interests in order to make earnings. HSBC relies on volatility, and risk appetite to pick up, so that rates can increase to its advantage. HSBC turnaround plan has seen the axing of about 40,000 jobs and the closure of more than 60 businesses, and it is still holding a 20% stake in the Bank of Communication.
From a turnaround perspective, Fitzpatrick believes HSBC has done pretty well having exited more than 14 countries and simplifying it business to be more efficient and robust.
“I think they have done well from a turnaround perspective. This was the first bank out there to recognize the credit crisis in 2007, they have exited 14 different countries they now have much simpler more narrowly defined business plan, “said Mr. Fitzpatrick.