Bank wants government to end uncertainty for 2,000 staff members as it reveals profits have halved in first nine months of year to $10.6bn

HSBC has called on Theresa May’s government to clarify the position of EU nationals working in the UK because of the uncertainty caused by the Brexit vote.

As Britain’s biggest bank reported profits down by almost 50% in the first nine months of the year, its chief executive, Stuart Gulliver, said the prime minister should be given “space” to negotiate the UK’s exit from the EU.

Of HSBC’s 42,000 workforce in the UK, around 2,000 hail from the EU. Gulliver said: “I would say [what is] slightly more urgent is clarity around the status of EU nationals working the UK.”

Ahead of the referendum on 23 June, Gulliver said HSBC could move 1,000 jobs to Paris if Britain voted for Brexit. On Monday, he said the bank – which has decided to keep its headquarters in London rather than move to Hong Kong – was in no rush to start moving staff.

“We are in a position where we can sit patiently and see what evolves,” said Gulliver.

The bank’s $10.6bn of pre-tax profits – compared with $19.7bn a year ago – were lower because of the loss on the sale of its Brazilian operation and a $500m hit for compensation payments for customers in the UK, largely the result of payment protection insurance (PPI) mis-selling.

HSBC shares were the biggest risers in the FTSE 100 – up almost 5% – despite the slump in profits, largely because of the reassurances Gulliver gave about its ability to keep paying dividends or conducting share buy backs.

David Cumming, head of UK equities at Standard Life Investments, told BBC Radio 4’s Today programme that while the results were better than expected, “the key here is we get some outside blood into the organisation to liven up what is perceived as a relatively slow-moving and bureaucratic culture”.

He added: “They won’t thank me for saying that but I think longer term with HSBC they have become a bit too big, a bit too complex to manage effectively.”

Gulliver said succession planning at the bank would be smooth, a contrast to when he took the top job in 2011 following a bitter boardroom battle.

The bank has already tried to tackle change at the top by announcing that chairman Douglas Flint will depart in 2017. There was no update on a successor who, for the first time in HSBC’s history, will be appointed from outside the management team.

The external appointment was “quite significant”, said Gulliver, whose departure is expected in 2018. Gulliver, though, was careful not to put a date on his departure, saying the appointment of the new chairman would “dictate on what timescale and by whom I’m replaced and what stage I retire”.

Gulliver has embarked on a strategy to clean up the bank following a series of scandals and the revelations last year about how HSBC’s Swiss banking arm helped wealthy customers dodge taxes. It emerged last week that the bank could face trial for alleged tax fraud in France over the activities of its Swiss subsidiary.

The bank, which has operations across 71 countries and employs 240,000 people around the world, had warned ahead of Monday’s results that it would take a loss on the sale of its Brazilian business.

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In the third quarter, the $1.7bn loss on the sale of the Brazilian business helped reduce profits to $843m from $6bn in the same period a year ago.

The much-anticipated sale of the Brazilian bank allowed HSBC to announce its first share buyback of $2.5bn at the time of the half-year results. Analysts are focused on the bank’s ability to pay dividends after it abandoned a pledge to keep increasing the payouts. A change in how the Bank of England treats HSBC’s 19% stake in its Chinese business – the Bank of Communications (BoCom) – helped its capital position.



Analysts at Bernstein said: “We feel this should be enough to allow the bank to maintain the dividend next year out of capital even as earnings decline.”



What is payment protection insurance (PPI)? PPI was sold alongside mortgages, credit cards and personal loans and was designed to cover payments if customers fell ill or lost their jobs. The policies were highly profitable for the banks but were often sold to customers without their knowledge or to people who were unable to claim, such as the self-employed. The Financial Services Authority began imposing fines on banks for the mishandling of PPI in 2006. It has become the most expensive mis-selling scandal in the UK, with a total bill so far of almost £40bn.





Gulliver said the BoCom stake would not be sold while he was at the helm and that the regulator’s approach to its stake in the Chinese bank would help its ability to pay dividends. The bank plans to pay $0.51 in dividends a year.

“This is another action forming part of our ongoing capital management of the group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. It also provides us with a significant capacity to manage the continuing uncertain regulatory environment,” said Gulliver.



