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Reuters

HSBC reiterated its commitment to mainland China as a “priority market” after two sources said the lender was reducing staff numbers at its digital wealth-management business Pinnacle by nearly half, or about 900 people.
“Our ambition is to become the leading international wealth manager for mass affluent and high-net-worth clients in mainland China,” an HSBC spokesperson said in a statement, without directly addressing staffing. “In 2024, we grew our wealth invested assets in mainland China by 61 per cent compared to 2023.”
Pinnacle, launched in 2020, sells insurance and fund products through a digital platform. It employed about 2,100 people at two of its main units as of the end of June last year, according to Reuters’ calculations based on company disclosure and official business records.
The reduction underscores the challenges the Asia-focused bank faces to boost growth and profitability in China at a time when it is slashing costs to increase returns.
Reuters reported in October that last year, Europe’s largest lender by assets started probing staff compensation structures and whether suppliers had inflated expenses, contributing to a sharp spike in costs that outpaced revenue at Pinnacle.
The staff reduction involves lay-offs, natural attrition and transfers to other units within the banking group in China, said the two sources, who have direct knowledge of the decision but declined to be identified due to the sensitivity of the matter.
The London-headquartered bank’s new CEO, Georges Elhedery, launched a sweeping restructuring exercise, involving job cuts, to reduce long-term costs and boost profits at the bank.
More than 500 insurance agents have already left Pinnacle in the past seven months, from around 1,700 in June, said the sources, mainly as its insurance brokerage unit stopped renewing job contracts after the launch of the review.
The banking group will soon start laying off around 100 staff at the Pinnacle fintech arm, with another 300 staff to be assigned to other business entities, such as its retail bank, leaving only a few dozen at the 400-person unit, they added.
Numbers are subject to final discussions, the sources said.
HSBC said it will continue to invest in premier and global private banking, insurance and asset management in the mainland China market, its spokesperson said.
HSBC’s sharp pullback from the China digital wealth business contrasts with its commitment to double down on the wealth-management business, and on Asia in particular, after exits from some subscale markets.
The Greater China region, which includes Hong Kong and Taiwan, is the group’s biggest income generator. Elhedery said last week that the bank was looking to invest more to bolster its wealth business, especially in Asia.
China is the only market globally where HSBC’s wealth and personal banking business, which Pinnacle is part of, is not yet profitable. In the first half of 2024, the unit’s China loss shrank to US$46 million from US$90 million a year earlier.
Pinnacle, part of the bank’s US$6 billion investment in Asia committed in 2021, was meant to expand HSBC’s reach outside its limited physical branch presence in China through its reliance on digital channels.
The bank originally aimed to hire 3,000 wealth managers in China by 2025.
Foreign financial institutions are facing challenges in mainland China.
US fund manager Vanguard, which formed a joint venture with domestic fintech firm Ant Group in 2019 to offer digital fund portfolio services, had to end the partnership and exit the market in 2023, after the business struggled to take off.


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Without directly addressing staffing, a spokesperson for the lender says wealth management in China remains a ‘priority’


Without directly addressing staffing, a spokesperson for the lender says wealth management in China remains a ‘priority’.


Wealth management

HSBC

Private banking

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HSBC cutting 900 staff at China digital wealth unit Pinnacle, sources say

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Without directly addressing staffing, a spokesperson for the lender says wealth management in China remains a ‘priority’

Without directly addressing staffing, a spokesperson for the lender says wealth management in China remains a ‘priority’