After UK’s exit from Brexit, the pound depreciated and this had a profound impact on UK industries to an extent that consumers were unable to purchase goods. Moreover, the pound continued to devalue and this interfered with the UK economy significantly.
For example, HSBC Britain holdings that experienced a profound plunge in profits by 82% as a result of UK’s exit from Brexit. HSBC is the most influential bank in the UK that contributes a major part of the nation’s share holdings (Bhimani & Soonawalla, 2010) .I selected this bank as it is one of the organizations that encountered a substantial upset that significantly impaired the nation’s economy after UK’s exit from Brexit .This was devastating as shareholders who had invested in this bank incurred massive losses and most resort to withdraw their shares (Lo & Kwan, 2017). As a matter of fact, most employees lost their jobs and it is expected that another 8000 jobs will be lost in 2019.
John Flint, who was appointed to manage HSBC Holdings in 2018, began his reign with many challenges. The preceding seven years had been tough on the company where 60,000 jobs were lost and operations in 21 nations were shut down. Even so, the predicament is still being encountered by the countries where HSBC still operates as the revenue rates are stagnant and the costs are excessively high. Moreover, profits that were incurred in the fourth quarter of 2018, presented lower values by 23% less than was projected by analysts which stoked concerns that Britain’s largest bank was still dormant. Furthermore, taking into account that HSBC Britain is more exposed to some of the fastest –growing markets such as China and yet was still amassing little profit, further exacerbated the situation, and the most horrible was that even Lloyd’s Bank that is UK’s rival had managed to accumulate 12 % profits in Britain’s stagnant economy.
In addition to this, China had opened up to the global market yet it had been a core profit market for HSBC. The low profits resulted from the revenue decrease which was brought about by financial markets, although, even after the stabilization of the markets, the interest rates that contribute to profits had leveled off (Boateng, 2016). The UBS analysts suggested that the bank had to abolish one of its core targets that comprised increasing revenue at a faster rate than costs, and instead opt to increase the costs and revenue simultaneously (Narandaran, Hamid & Habibullah, 2016). Flint concurred with the statements which he said would be resolved by suspending investments and containing expenditure.
The strategies put in place include transferring at least 20% of the shareholdings to Paris. Stuart Gulliver, the HSBC chief executive mentioned that this would aid to quantify some of the aftershocks of the company and generate more revenue for the country. He further went on to state that the HSBC would examine the progress on work permits, considering the fact that the bank employs approximately 2100 people in the UK and 1300 more personnel from overseas (Lo & Kwan, 2017). Considering that China is a trade partner of the HSBC Holdings, the Chief’s executive proposition was that the HSBC should wait for the US and China to dump products less than the market value and instigate stringent trade barriers before the company deploys more assets worth £122bn in Asia and employs 4000 people in Hong Kong. The chief executive went on to mention that it is anticipated that the US will trade with Mexico in the future although currently there seems to be strife between the two countries due to strict tariffs and immigration limitations. This will afterward sustain the HSBC Holdings (Engle & Zazzara, 2018). Furthermore, the relocation of the company’s subsidiaries in Polish and Irish from London to French is another effective strategy that will be implemented in re-establishing the organization. HSBC France will obtain the activities of seven other European branches; a tactic that would guarantee that HSBC Britain continues to supply its European consumers. This is in regards to the loss of passport privileges for the UK firms that initially allowed them to trade financial services within the block.
I concur that the HSBC Holdings in Britain should relocate its subsidiary units to France as this will improve their revenue and the company will still serve the targeted customers. I would recommend that apart from the company expanding its shareholdings among European Countries, it should extend its services to other regions to access a wider market. Moreover, the organization should foster good relations with other markets from Asia and Africa to grow its returns and also reduce the risks of losing more customers as it will already have new markets. Additionally, if the country forms good networks with new markets, the European consumers will access new products and this may further accelerate market growth.
Bhimani, A., & Soonawalla, K. (2010). Sustainability and organizational connectivity at HSBC. Accounting for Sustainability: Practical Insights, Earthscan, London, 173-190.
Boateng, H. (2016). Customer knowledge management practices on a social media platform: A case study of MTN Ghana and Vodafone Ghana. Information Development, 32(3), 440-451.
Engle, R. F., & Zazzara, C. (2018). Systemic risk in the financial system: capital shortfalls under Brexit, the US elections and the Italian referendum. Journal of Credit Risk, 14(4).
Lo, K. Y., & Kwan, C. L. (2017). The effect of environmental, social, governance and sustainability initiatives on stock value–Examining market response to initiatives undertaken by listed companies. Corporate Social Responsibility and Environmental Management, 24(6), 606-619.
Narandaran, Y. Y., Hamid, B. A., & Habibullah, M. S. (2016). Financial risk exposures of the airlines industry: Evidence from Cathay Pacific Airways and China Airlines. International Journal of Business and Society, 17(2), 221-244.