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[LONDON] HSBC Holdings Plc may slow the pace of hiring in China's Pearl River Delta amid a market rout and cooling growth in the world's second-largest economy, Chief Executive Officer Stuart Gulliver said.
While the bank still plans to add some 4,000 jobs in China's southeast region in coming years, it may happen at a "slightly slower" pace, Gulliver said in a telephone interview on Monday. HSBC will provide an update on the scale of a planned redeployment of about US$100 billion of risk-weighted assets to Asia alongside full-year results on Feb. 22, he said.
"The fact that Asia is bumpy right now means we have to be streetwise about the way we do it," Gulliver said. "It also might give us an advantage, as this is no longer on the radar screen of as many of our competitors. Now it's much harder for others to compete because it is uncertain, and if you're not a bank like we are, you may now be a bit worried about whats going on."
Even though HSBC said on Monday that it will keep its headquarters in London rather than move to Hong Kong, Gulliver reiterated that he remains optimistic about Asia's growth outlook. In June, the CEO said about half of US$180 billion to US$230 billion of assets he will redeploy under a revised strategy will be invested in Asia. A deceleration in China's economy to its slowest pace since 1990 and investor concern over the economic management of the world's most populous country has since dented sentiment toward the region.
"We are still committed to the pivot to Asia," Gulliver said. "We still believe that if you take the next 10 years there will be faster gross domestic product growth in Asia than anywhere else in the world." Asia accounted for 62 per cent of HSBC's pretax profit in the nine months to Sept 30, according to its latest set of results. Profit in Asia fell 4.4 per cent to US$3.5 billion in the third quarter, while in Europe earnings dropped 44 per cent to US$969 million.
Since taking over in 2011, Gulliver has been paring back the sprawling operations of Europe's largest bank, cutting more than 87,000 jobs and exiting at least 78 businesses. The CEO said he expects the sale of the Brazil unit to be completed by the end of the first half, with HSBC updating investors on disposal plans for its Turkey business next week.
Europe's largest bank would probably move about 1,000 bankers to Paris if Britain decided to leave the European Union in a referendum, according to Gulliver. He mentioned the risk of "Brexit" among factors including negative interest rates in Europe and China's economic slowdown hurting bank stocks.
HSBC shares have dropped about 17 per cent this year, while Deutsche Bank AG has lost 30 per cent and Credit Suisse Group AG is down 37 per cent.
"Right now we've got financial markets out of kilter with the real economy," Gulliver said. "The problem is the financial market shapes sentiment and eventually CEOs like myself are making investment decisions that actually lead to an impact on the real economy. If this thing carries on until end of the first quarter, it will have an impact on real economy." Gulliver, who took over the helm in 2011, said he doesn't plan to retire anytime soon, adding that the board has "clear succession plans" for all top executives.