HSBC reviewing operations - could NZ office close?

HSBC is reviewing its operations. Photo / Ross Setford.

HSBC's New Zealand arm is one of a number of non-strategic businesses the bank could look to sell or close down as part of a major overhaul, the Financial Times is reporting.

In February, the global bank said it would slash 35,000 jobs and cut US$4.5 billion in costs from its business by shrinking its US and European operations to focus back on Asia.

But that was before the full force of the Covid-19 pandemic hit.

Now the board is said to be pressing for those cuts and more.

A report in the FT said some of the bank's more marginal businesses that were previously given the benefit of the doubt were being re-examined, sourcing senior figures at the bank.

It said executives were revisiting a long list of small, non-strategic countries including New Zealand, Malta, Bermuda, the Philippines and New Zealand to see if any of those divisions could be sold or closed.

An HSBC New Zealand spokesman said: "We constantly review our business operations. The group's new strategic focus will see Asia continue to be a core engine for business growth over the next few years."

New Zealand is part of the group's Asia business alongside Australia.

According to KPMG's Financial Institutions Performance 2019 report which was released in February this year HSBC had 227 staff in New Zealand based out of its one branch in central Auckland.

Its net profits after tax were $51 million in the 2018 calendar year up from $47m in 2017.

It was ranked the eighth largest bank by total assets in New Zealand of $6.016 billion. It had $4.1b in net loans and advances and $3.06b in deposits.

Banks are expected to come under pressure from the economic fall-out from the pandemic as customers lose their incomes and can no longer pay for debts and banks have already begun provisioning for the potential defaults.

Reserve Bank governor Adrian Orr yesterday said while New Zealand's financial system was in a solid position to withstand the economic pressure from Covid-19 there would be losses on bank balance sheets.