Banking union says reports of HSBC retreat from Malta ‘purely unwarranted speculation’

The MUBE said it would be taking a business-as-usual approach after Bloomberg reported that HSBC was planning to cut Malta, Bermuda and its Uruguay operations

The Malta Union of Bank Employees has said it is treating a report by Bloomberg that the HSBC group was planning to cut down on its smaller country operations, as "purely unwarranted speculation".

The MUBE said it had "acted immediately... to quash unwarranted negative speculation about HSBC Bank Malta’s future."

"As it is not the first time that this has happened, MUBE on its part will continue to monitor any developments, if any, in line with the Union’s long standing standard practice. Needless to say, the HSBC Bank Malta workforce is currently working relentlessly to continue to grow business and move ahead with its plans for the future."

The union said that, while seeking further assurance from the Bank’s top management, it would support employees’ welfare with a business as usual approach.

According to the Bloomberg report, HSBC chief executive officer John Flint and chairman Mark Tucker are considering reducing the global footprint of the “world’s local bank” in a plan to be revealed in the next months.

Bloomberg reported that Flint is already reviewing as many as a quarter of the 67 countries the bank operates in, and is mulling an exit or sale from smaller consumer operations such as Bermuda, Malta and Uruguay.

In a company statement, the bank said that the HSBC Malta board had no information that required a further company announcement and that the bank’s media policy is not to comment on speculative stories.

Bloomberg said sources said discussions about HSBC’s strategy are at an early stage and no final decisions have been made, but a spokeswoman for HSBC declined to comment beyond saying that the bank will update investors at or before its first-half earnings.

HSBC Malta is the island’s second largest retail bank after Bank of Valletta, which together command the greater part of the retail banking sector. The bank set foot in Malta after acquiring Mid-Med Bank in 1999.  

HSBC also holds almost half of deposits in Bermuda. “Managers are also wary of exiting places in Asia where investors have long memories when international companies pull out,” Bloomberg reported sources as saying.

In a tweet, Nationalist Party leader Adrian Delia said that the PN would be "at the forefront to ascertain that Malta remains a leading financial services jurisdiction", stopping short from passing a political statement on the Bloomberg report.

HSBC has been shrinking since the financial crisis as low interest rates and new regulations put earnings under pressure, and misconduct scandals revealed widespread compliance failures, closing almost 100 businesses and reduced the number of countries it operated in to 67 from 88. The bank however still has 3,900 global offices, 229,000 employees, and with $2.5 trillion of assets, it remains Europe’s largest bank.

Back in 2010, the Malta Union of Banking Employees claimed in a circular to employees that HSBC was considering selling its core business in Malta. Talks were then ongoing between HSBC and the MUBE over a trade dispute on offshoring – the relocation of jobs out of Malta to cheaper destinations – dubbed by HSBC as ‘project Whiteheart’. The bank had not reacted to the claims.

When in 2011 the bank was named ‘Bank of the Year in Malta’ by the Financial Times, HSBC Malta had closed down branches in Msida, Santa Venera, Naxxar, Attard, Manwel Dimech Street in Sliema and Luqa, to be replaced by ATMs; while Gozo-based agencies in Nadur and Xaghra and the University branch started offering reduced service by appointment. The cuts complemented an €11 million investment project to upgrade the branch network and automated banking systems.

HSBC Malta reported a profit before tax of €49.8m for 2017, a decrease of €12.4m or 19.9% on the previous year.

The bank announced a €20 million extraordinary dividend for shareholders, citing it as a “reward” for the implementation of the bank’s strategic plan. The reported pre-tax profit includes the gain on disposal of the bank’s membership interest in Visa Europe amounting to €10.8m and a provision of €8m for remediation of the legacy operational failure in the bank’s brokerage business.