I think there are many reasons for this shift. One major factor is the increasing regulatory burden on banks, which is making them more difficult and expensive to operate in multiple jurisdictions. Another factor is the changing landscape of the banking industry, which is being disrupted by new technologies and changing consumer behavior.
Apart from these factors, there are also geopolitical considerations at play. As the world becomes increasingly polarized, with increasing protectionism and geopolitical tensions, it is becoming increasingly difficult for banks to operate across borders.
So what does this mean for the future of global banking? Some analysts believe that this trend towards consolidation and streamlining is likely to continue, with smaller niche players emerging to fill the void left by the big banks. Others argue that the rise of fintech and digital banking could lead to fundamental changes in the way banking is done, with traditional banks struggling to keep up with the pace of innovation.
Whatever the future holds, one thing is clear that the global banking industry is undergoing a period of significant change, and banks will need to adapt if they are to survive and thrive in the coming years.
Topic: HSBC, Citigroup and the End of Global Banking (Read 162 times)
Bumping this as it could also be relevant.
According to this piece, HSBC and citigroup are reversing their expansionist trend. They're reducing the number of nations they have a presence in. Perhaps due to lack of expected economic growth. The motives behind the move aren't entirely clear. No mention on who might step in to fill the vacuum created by the departure of big banks from regions they currently operate in. I wonder if growing market share of 3rd party payment apps like paypal and apple pay are cutting into their global market share. Crypto could also be gobbling up markets that banks traditionally occupied.
Crypto may be a threat , but PayPal isn't imo. There is no more room for PayPal to grow, but it csn dimish a lot
About those banks operations in emmergent markets, I don't think it is a big issue.
Emmergent countries are very unstable. HSBC used to have operations in Brazil, but our banking system is an oligopoly of 3/4 banks and it is very hard for any other to come in.
But overall, people do not want the end of the banking system, neither governments. Nobody wants it.
The end of banking system would mean a huge financial crisis. They can exist, and even coexist with cryptocurrencies
End of banking - is an overstatement! It's called business restructuring and re-prioritization activities. Citigroup and HSBC are global banks and they want to shift their focus to those markets which are doing well or at least have a potential. They will sell off their assets for those markets where they don't see much scope. That's quite normal in business world.
Various apps are definitely eating into the remittance market but these apps also need a bank to support their transactions. They can't operate on their own.
It seems Bloomberg is also practicing the clickbait protocols!
Various apps are definitely eating into the remittance market but these apps also need a bank to support their transactions. They can't operate on their own.
It seems Bloomberg is also practicing the clickbait protocols!
I think that's definitely a possibility, and it will be interesting to see how the banking industry adapts in the face of this new technology. However, I don't think we're quite at the point where crypto is well suited to take over all the functions of traditional banking.
There are still a lot of areas where banks have an advantage. For example, in terms of lending, banks are still better equipped to assess and manage risk. So I it's premature to say that the end of banking is near.
It's important to remember that banks have been around for centuries and have adapted to changing markets and technologies in the past
There are still a lot of areas where banks have an advantage. For example, in terms of lending, banks are still better equipped to assess and manage risk. So I it's premature to say that the end of banking is near.
It's important to remember that banks have been around for centuries and have adapted to changing markets and technologies in the past
Banks are not going to disappear anytime soon. In my area they are now just asking any ID for anyone to have an account with no minimum deposit. If crypto is for the unbanked, the banks are literally giving them the chance now while they also in transition to digital banking.
Bank apps may also soon have crypto services because I've seen some ads of them with tag saying "Invest in Crypto."
As for HSBC, one only has to remember all their scandals and wonder why they exist at all after all, and who still continued to give them their trust after all the dirt that was washed away. But I'm not worried that such predators like them won't survive and adapt in the sense that they will offer some new services and products, and in addition, maybe make a bigger profit if they don't need physical banks and various officials who work in them.
There is only one problem in your thinking, and that is that banks are not going anywhere in the literal sense, but are only adapting their operations, considering that more and more people are transferring their operations with banks to a digital form. I used to have 6-7 branches of one bank in the place where I live, and today there is only one, although I have information that the number of clients has remained more or less the same.
What's more, in all of this, banks have gotten under the skin of the average client even more, because they are literally in every device they use - and there is practically no need to go to the bank.
There are a number of options available which could fill the vacuum left behind by banks reversing expansionist trends.
There is only one problem in your thinking, and that is that banks are not going anywhere in the literal sense, but are only adapting their operations, considering that more and more people are transferring their operations with banks to a digital form. I used to have 6-7 branches of one bank in the place where I live, and today there is only one, although I have information that the number of clients has remained more or less the same.
What's more, in all of this, banks have gotten under the skin of the average client even more, because they are literally in every device they use - and there is practically no need to go to the bank.
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I guess it makes sense in the age of mobile internet. More and more people have banking or fintech apps on their mobiles. What used to require a physical branch, such as going to a bank to order a transfer, can now be done in an instant from your mobile phone. There is a trend towards a reduction in the use of cash, which means that fewer ATMs are needed.
In short, news like this is not uncommon. If these banks are leaving certain countries, it may be because they do not see profitability, but it is along the same lines.
I think we are in a time of change in the banking sector, and in the same way that there was a time when typewriters were no longer used, replaced by PCs, then laptops and even tablets, banking is going through a similar process and the banking of year 2030 will look nothing like the banking of 2000.
In short, news like this is not uncommon. If these banks are leaving certain countries, it may be because they do not see profitability, but it is along the same lines.
I think we are in a time of change in the banking sector, and in the same way that there was a time when typewriters were no longer used, replaced by PCs, then laptops and even tablets, banking is going through a similar process and the banking of year 2030 will look nothing like the banking of 2000.
According to this piece, HSBC and citigroup are reversing their expansionist trend. They're reducing the number of nations they have a presence in. Perhaps due to lack of expected economic growth. The motives behind the move aren't entirely clear. No mention on who might step in to fill the vacuum created by the departure of big banks from regions they currently operate in. I wonder if growing market share of 3rd party payment apps like paypal and apple pay are cutting into their global market share. Crypto could also be gobbling up markets that banks traditionally occupied.
Nobody's really going to care, HSBC and Citigroup are like dinosaurs in the banking industry, just like how IBM and to some extent MS are dinosaurs in the IT industry.
People are going to stop caring about your business unless you strive to keep it relevant (Google, Apple, not Meta: They are in big trouble if users only cling onto Facebook and Instagram and WhatsApp).
There were reports at the last shareholders meeting their largest shareholder wanted HSBC to be split up into smaller parts and some of it to be sold off (I think) this could be a move towards that direction but I'm not sure how close he is to them (it made the news when it was mentioned at an annual shareholder meeting and might not have been privately discussed before).
A lot of digital banks have taken the place of traditional ones. Users here were surprised to see circle offering 4% interest on fiat investments for example too (the makers of usdc) and High Street banks barely offer much anymore and they're normally with added conditions.
A lot of digital banks have taken the place of traditional ones. Users here were surprised to see circle offering 4% interest on fiat investments for example too (the makers of usdc) and High Street banks barely offer much anymore and they're normally with added conditions.
Quote
August 16, 2022
Twenty years ago, as they returned from summer vacations, staff at HSBC Holdings Plc began moving into their gleaming new global headquarters in London’s Canary Wharf. Designed by Norman Foster, the building was one of two new towers to spring up on the skyline east of the City. The other was home to Citigroup Inc., whose employees had moved in a few months earlier. At the time, these were jointly the second-tallest buildings in the UK. They reflected the confidence of their occupants: each vying to be the biggest, most imposing bank in the world.
Two decades later, the buildings now stand as monuments to a bygone age. The global ambitions of both HSBC and Citigroup have been pared back, replaced by a narrower focus on core markets. HSBC has reduced the number of countries and territories in which it operates to 64 from 88. Its largest shareholder, China’s Ping An Insurance (Group) Co., has been agitating for a spinoff of its Asia operations. Last year, Citigroup announced its exit from 13 consumer markets across Asia, Europe and the Middle East and is trying to sell its Mexican business, Banamex.
The shift in strategy of the two banks tracks the arc of globalization.
Back in 2002, HSBC coined the tagline “the world’s local bank” to describe its strategy. In the prior 10 years, it had made a series of acquisitions – in the UK, Brazil, US, France and Mexico – as part of a “three-legged stool” strategy to build a presence across Asia, North America and Europe.
Founded in Hong Kong in 1865, it outgrew its domestic market and began to invest excess capital abroad. The strategy was the brainchild of Michael Sandberg, its chairman between 1977 to 1986. “If you stand still these days you are in fact moving backwards,” he said.
The strategy followed the path laid by Citi. In 1967, Citi promoted Walter Wriston, head of its overseas business, to president. Wriston had already made clear his ambitions at a dinner a few years earlier: “The plan in the overseas division was first to put a Citibank branch in every commercially important country in the world. The second phase was to begin to tap the local deposit market by putting satellite branches or mini-branches in a country. The third phase was to export retail services and know-how from New York.”
Like HSBC, the bank deployed capital all over the world. It does business in 160 countries and jurisdictions. (The United Nations currently has 193 member states).
By the time they moved into their new offices, HSBC and Citi were the most globally diversified of the major international banks. “We fought like cats and dogs,” said William Purves, who succeeded Sandberg as chairman, “but in some ways we were quite close.” As global trade ballooned, the banks benefited as financial intermediaries, riding the coattails of the post-Cold War global economic integration.
But with the global financial crisis in 2008, the prevailing model of globalization began to unwind. As countries turned inwards and regional trading blocs became more dominant, the expansion of global value chains slowed. Having risen in a straight line from 29% of global gross domestic product in 1993, goods trade – the sum of merchandise imports and exports – peaked at 51% in 2008. (In 2021, it was down to 46%.)
As with many important turning points, the shift wasn’t initially obvious. Citi promoted a strategy to become an “urban bank, serving customers in the top 100 cities around the world.” Its post-crisis CEO, Vikram Pandit, argued that “people in these bigger cities have much more in common as customers than they do necessarily by nationality: from a banking perspective, São Paolo has more in common with London than it does with San Juan.” HSBC continued to plaster its “world’s local bank” slogan across jet bridges at major airports until 2016.
But as profitability in their outposts declined and the cost of managing far-flung organizations grew alongside stricter post-crisis regulations, the banks began to shed their global aspirations. Pandit’s successor as CEO, Mike Corbat, exited a number of consumer markets and his successor, Jane Fraser, doubled down, exiting several more, including Mexico, Citi's largest standalone consumer franchise outside the US.
HSBC was similarly withdrawing from multiple markets. Last year, it sold its French business to private equity firm Cerberus Capital Management for 1 euro. Hong Kong is back to contributing 30% of its loan book, a level not seen in over 20 years.
Now the group faces its biggest test: a call to dismantle what’s left of its “three-legged stool.” Ping An reckons spinning off its Asian business could release $8 billion of capital and create between $25 billion and $35 billion of additional market value. At its interim results presentation earlier this month, HSBC countered that “structural change risks diluting the economics of our international business model.”
But with globalization in retreat, the value of an international banking network is diminished. From its global headquarters in Canary Wharf, HSBC’s global strategy is a throwback to a different age.
https://www.bloomberg.com/opinion/articles/2022-08-17/hsbc-citigroup-and-the-end-of-global-banking
Twenty years ago, as they returned from summer vacations, staff at HSBC Holdings Plc began moving into their gleaming new global headquarters in London’s Canary Wharf. Designed by Norman Foster, the building was one of two new towers to spring up on the skyline east of the City. The other was home to Citigroup Inc., whose employees had moved in a few months earlier. At the time, these were jointly the second-tallest buildings in the UK. They reflected the confidence of their occupants: each vying to be the biggest, most imposing bank in the world.
Two decades later, the buildings now stand as monuments to a bygone age. The global ambitions of both HSBC and Citigroup have been pared back, replaced by a narrower focus on core markets. HSBC has reduced the number of countries and territories in which it operates to 64 from 88. Its largest shareholder, China’s Ping An Insurance (Group) Co., has been agitating for a spinoff of its Asia operations. Last year, Citigroup announced its exit from 13 consumer markets across Asia, Europe and the Middle East and is trying to sell its Mexican business, Banamex.
The shift in strategy of the two banks tracks the arc of globalization.
Back in 2002, HSBC coined the tagline “the world’s local bank” to describe its strategy. In the prior 10 years, it had made a series of acquisitions – in the UK, Brazil, US, France and Mexico – as part of a “three-legged stool” strategy to build a presence across Asia, North America and Europe.
Founded in Hong Kong in 1865, it outgrew its domestic market and began to invest excess capital abroad. The strategy was the brainchild of Michael Sandberg, its chairman between 1977 to 1986. “If you stand still these days you are in fact moving backwards,” he said.
The strategy followed the path laid by Citi. In 1967, Citi promoted Walter Wriston, head of its overseas business, to president. Wriston had already made clear his ambitions at a dinner a few years earlier: “The plan in the overseas division was first to put a Citibank branch in every commercially important country in the world. The second phase was to begin to tap the local deposit market by putting satellite branches or mini-branches in a country. The third phase was to export retail services and know-how from New York.”
Like HSBC, the bank deployed capital all over the world. It does business in 160 countries and jurisdictions. (The United Nations currently has 193 member states).
By the time they moved into their new offices, HSBC and Citi were the most globally diversified of the major international banks. “We fought like cats and dogs,” said William Purves, who succeeded Sandberg as chairman, “but in some ways we were quite close.” As global trade ballooned, the banks benefited as financial intermediaries, riding the coattails of the post-Cold War global economic integration.
But with the global financial crisis in 2008, the prevailing model of globalization began to unwind. As countries turned inwards and regional trading blocs became more dominant, the expansion of global value chains slowed. Having risen in a straight line from 29% of global gross domestic product in 1993, goods trade – the sum of merchandise imports and exports – peaked at 51% in 2008. (In 2021, it was down to 46%.)
As with many important turning points, the shift wasn’t initially obvious. Citi promoted a strategy to become an “urban bank, serving customers in the top 100 cities around the world.” Its post-crisis CEO, Vikram Pandit, argued that “people in these bigger cities have much more in common as customers than they do necessarily by nationality: from a banking perspective, São Paolo has more in common with London than it does with San Juan.” HSBC continued to plaster its “world’s local bank” slogan across jet bridges at major airports until 2016.
But as profitability in their outposts declined and the cost of managing far-flung organizations grew alongside stricter post-crisis regulations, the banks began to shed their global aspirations. Pandit’s successor as CEO, Mike Corbat, exited a number of consumer markets and his successor, Jane Fraser, doubled down, exiting several more, including Mexico, Citi's largest standalone consumer franchise outside the US.
HSBC was similarly withdrawing from multiple markets. Last year, it sold its French business to private equity firm Cerberus Capital Management for 1 euro. Hong Kong is back to contributing 30% of its loan book, a level not seen in over 20 years.
Now the group faces its biggest test: a call to dismantle what’s left of its “three-legged stool.” Ping An reckons spinning off its Asian business could release $8 billion of capital and create between $25 billion and $35 billion of additional market value. At its interim results presentation earlier this month, HSBC countered that “structural change risks diluting the economics of our international business model.”
But with globalization in retreat, the value of an international banking network is diminished. From its global headquarters in Canary Wharf, HSBC’s global strategy is a throwback to a different age.
https://www.bloomberg.com/opinion/articles/2022-08-17/hsbc-citigroup-and-the-end-of-global-banking
....
According to this piece, HSBC and citigroup are reversing their expansionist trend. They're reducing the number of nations they have a presence in. Perhaps due to lack of expected economic growth. The motives behind the move aren't entirely clear. No mention on who might step in to fill the vacuum created by the departure of big banks from regions they currently operate in. I wonder if growing market share of 3rd party payment apps like paypal and apple pay are cutting into their global market share. Crypto could also be gobbling up markets that banks traditionally occupied.
Even if crypto currently isn't well suited towards providing support for home, car, business and student loans. There are still so called remittance markets, mobile payments and other areas where they can be competitive.
Other articles published over the last 2 years claimed the end of banking could be near. Suggestions were made for people to prepare for a post banking world. I'm not certain what that means. It could refer to CBDC (central bank digital currencies). It could also refer to a type of cashless society. There are a number of options available which could fill the vacuum left behind by banks reversing expansionist trends.
Its not often that large publications like bloombergs publish content claiming banks could come to an end.
Maybe this will make for a good discussion topic?
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