HSBC targets IT in cost cutting drive

HSBC targets IT in cost cutting drive

Banking giant HSBC plans to streamline its IT operations as part of a major, £2.1 billion, cost cutting exercise.

In the wake of disappointing first quarter financial results, the bank's new CEO Stuart Gulliver told analysts on a conference call that technology development will be moved to low-cost countries to help save money.

Offshoring is likely to lead to $175 million savings, said Gulliver, while efforts to reduce paperwork could reap a $100 million annual return.

The company's US credit card business and branch network are also under review and could fetch up to $25 billion, according to analysts.

Having already decided to abandon its Russia retail banking business, further countries could be left while wealth management services will be restricted to just 18 countries. Instead, there will be a focus on commercial banking, says Gulliver.

The plans are designed to save between $2.5 billion and $3.5 billion over the next three years and drive down cost to income ratio from 55% to 48%-52%.

Says Gulliver: "This is not about shrinking the business but about creating capacity to re-invest in growth markets."

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