HONG KONG/SHANGHAI - HSBC Holdings Plc is reviewing expenses and operational controls at its China digital wealth business Pinnacle, in a move that could result in layoffs and mark an abrupt reversal of the lender's ambition for the unit, several sources said.
A downsizing of Pinnacle, which was launched in 2020 and sells insurance and fund products, would be a setback for Europe's largest lender by assets, which has doubled down on Asia while divesting from less-profitable businesses elsewhere. Pinnacle, through its reliance on digital, was meant to expand the bank's reach outside its limited physical branch presence in China.
It is, however, the only market globally where HSBC's wealth and personal banking business, which Pinnacle is part of, is not profitable yet. In the first half of 2024, the unit reported $46 million in loss compared to $90 million in the year-ago period.The bank's review of Pinnacle started after HSBC's global insurance Chief Executive Ed Moncreiffe moved into his role in April, two of the sources said. He was previously HSBC Life's Hong Kong and Macau head.
The review is also looking into Pinnacle's staff compensation structure, the source said. Salespeople at Pinnacle earn fixed salaries that are relatively higher than others in the industry, the source said.