5 Jul
2021

Will a deeper restructuring help the HSBC share price?

first_imgSimply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Karl Loomes | Tuesday, 26th May, 2020 | More on: HSBA Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Our 6 ‘Best Buys Now’ Shares Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Karl has shares in HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img “This Stock Could Be Like Buying Amazon in 1997” Enter Your Email Address Will a deeper restructuring help the HSBC share price? Image source: Getty Images. I have been a fan of HSBC (LSE: HSBA) as an investment for some time. As well as a strong dividend, my position has been led by a planned restructuring that would see the bank focus its assets and capital in its Asian business. The Covid-19 crisis and lockdown unfortunately caused this to be halted.However, today news emerged that HSBC’s board is pushing for the restructuring plan to be reinstated. Not only that, but for even more drastic measurers to be taken. Personally, I think this is likely to be a good thing.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…More of a good thingThe major outline of HSBC’s restructuring plan was effectively to focus more of its resources in Asia, its historical home. This would include job cuts for what many see as an overinflated workforce. It would also involve closing down its more inefficient operations in the US and parts of Europe.For me this makes sense. I am a proponent of the Pareto Principle, which says 80% of results often come from just 20% of the inputs. Focusing resources on those 20% of inputs can yield disproportionate benefits. In the case of HSBC, this seems exactly the intention.According to reports, HSBC’s board is now pushing for an even more ruthless attitude to its weaker operations. The suggestion is that those arms that may have been given the benefit of the doubt will now be cut. It has also been suggested that this may include a sale of its US business entirely, as well as its retail network in France.Though it is wrong to suggest that if a small amount of something is good, more of it must be better, in this case I think that may be the case. Being harsh and undergoing dramatic change to weather bad times can lead to a lean, efficient business that will benefit disproportionately in the good times.HSBC’s problemsOne major problem HSBC faces at the moment, along with other lenders, is the potential for bankruptcies hitting their books. Lockdown will almost certainly bring about a wave of businesses collapsing – many of which will have borrowed money from HSBC.At this point, nobody knows how bad this will be. Last month HSBC made a $3bn provision for these bad loans, hurting its quarterly results. Even more worrying, CFO Ewen Stevenson warned of “deep, severe recession events”.The other major concerns I have with HSBC as an investment now is the suspension of its dividend. For me its high yield was always a major selling point. I think it is a sensible decision to suspend the dividend at the moment, but with a dramatic restructuring likely to take a year or so (not to mention those “recession events”), I worry about when and at what level it will be reinstated.That said, I don’t think these problems are insurmountable by any means, which could make HSBC’s currently low share price a bargain. See all posts by Karl Loomeslast_img read more

Read More