By Don Quijones: Global bankster behemoth HSBC is not having a good 2015, despite celebrating its 150th anniversary. It has been implicated in even more scandals than usual, faces a 5% increase in dividend costs in its adopted home country, the UK, and has decided to lay off another 25,000 workers worldwide. It’s also selling off its Brazil and Turkey units and is even threatening to up sticks from the City of London and move its headquarters back to Hong Kong.
Which begs the question: why such drastic restructuring? More to the point, why now?
Back to the Past
According to HSBC, the move is aimed primarily at restoring investor confidence. Its decision to sell its operations in Turkey and Brazil forms part of a strategic reorientation toward East Asian markets, where HSBC originally cut its teeth 150 years ago (laundering the proceeds from the British East Indian company’s opium trade, as I documented here), and where margins are currently much higher than in Brazil and Turkey.
HSBC’s loss of interest in the Brazilian and Turkish markets is down to two main factors, according to Foreign Policy magazine: first, both markets are slowing down at an alarming rate; and second, they don’t offer the same get-richer-quicker opportunities available in the more unequal markets of the East:
In Brazil, assiduous redistribution by the governments of Luiz Inácio Lula da Silva and Dilma Rousseff has, for all their faults, evened out the income distribution to a historic degree. In Turkey, income inequality is also lower than it was when HSBC made its big acquisitions.