HSBC (NYSE:HBC) announced on Wednesday that it will be selling its insurance businesses in Asia and Latin America for $914 million. This move comes after management has been trying to get the company back to higher profitability and more efficient. HSBC has also said that they will be selling its general insurance units in Hong Kong, Singapore and Mexico to AXA for $494 million. QBE Insurance, based in Australia, has agreed to pay $420 million for its business operations in Argentina.
These deals come after management has repeatedly said that they will be focusing on cost cutting techniques and selling assets to help balance its finances and promote growth. “This is a further step in the execution of our strategy,” says HSBC CEO, Stuart Gulliver. “It will enable us to focus our capital and resources on the growth of our core businesses, including the building of our broader wealth management capabilities.”
HSBC was one of the banks that took money from the European Central Bank after the central bank announced it would be opening a line of credit to all banks to avoid bank failures. HSBC took 300 million pounds in aid from the central bank. However, HSBC is taking fire lately for taking that much aid when they are still turning out a profit. However, the company has been defending itself citing tough economic conditions and lagging business operations in Europe.
Shares are up half a percent to 43.39 today as the broader market rose on good news in Europe and the Greek debt swap appears to be cleared with bondholders.
As far as HSBC’s latest moves are concerned, it is good that management is focusing on cost cutting techniques and focusing on profitability. Now from where I stand, I do not think HSBC should have taken that extra money from the ECB. There are quite a few banks throughout Europe that could desperately use that huge sum of money. HSBC is profitable, the bailout money was meant for banks that are not profitable and on the verge of failing. In that respect, I do not agree with the board’s decision to take that money and I believe they could get some negative feedback from that which could be an issue. Other than that, I think HSBC is in a good position. I definitely like HSBC more than its other British competitor, Barclays. HSBC has been able to sell off more of its assets and raise more money which I believe could really help the company in the long run.