1st December 2022
Bite-sized business news from the UK and beyond
- HSBC scales back
- Musk picks a fight with Apple
HSBC scales back
This week banking giant HSBC announced it was trimming back its operations with the sale of its Canadian arm and the closure of a quarter of UK branches.
How did we get here?
HSBC has been under pressure from its largest shareholder, Chinese insurer Ping Am, to cut costs and split its high growth Asian business from the slower growth western assets.
The insurer has been frustrated by the HSBC’s falling share price and by the fact that British banking regulators forced the bank to stop paying dividends during the height of the pandemic, cutting a key source of income for shareholders.
Therefore the sale of the Canadian unit to the country’s biggest bank RBC will be well received by Ping Am as it will net HSBC $10bn that it can give back to shareholders.
RBC will receive 130 bank branches and over 780,000 retail and commercial customers to strengthen its market position in Canada further.
The digital banking shift continues
The advent on online banking has transformed how customers interact with personal finances with fewer people using physical bank branches, this trend accelerated during Covid.
A decade ago HSBC had 1,200 UK locations but this will shrink to 327 by next year after it announced the latest round of closures.
The affected branches served fewer than 250 people a week. Conversely use of its mobile app has almost tripled since 2017.
Next steps: Both announcements aren’t without controversy: Regulators could thwart the sale of the Canadian business if they believe it gives too much power to RBC. Campaigners say that the closure of bank branches disproportionately affect the elderly and those without access to the internet.
Other stories to keep you in the loop
- High court approves Bulb takeover by Octopus Energy
- Eurostar security staff to strike during busy pre-Christmas travel period
- Coffee prices jump as food inflation hits new high
- H&M to cut 1,500 jobs as retailers face slowing sales and rising costs
- Mulberry swings to loss as UK sales take hit amid economic woes
Musk picks a fight with Apple
This week in a series of posts on his newly acquired platform, Twitter CEO Elon Musk accused Apple of everything from threatening free speech to not being transparent about its censorship practices.
But Elon’s core issues with Apple are financial
- Apple takes a 30% cut of every purchase of and within big companies’ apps on its devices—which could include the $8 monthly fee that Musk plans to charge for verification on Twitter.
- Musk said Apple has “mostly stopped” advertising on Twitter. Apple was Twitter’s top advertiser in the first three months of this year, spending a reported $48m.
- Musk also alleged that Apple threatened to boot Twitter from the App Store, potentially blocking millions of iPhone users from the site.
Musk wants to make Twitter profitable and diversify revenue beyond ads, which make up 90% of Twitter's sales (but have been sagging). Last year Twitter launched its Twitter Blue subscription, which includes perks like early access to new features like tweet-editing. But Apple's 30% fees could strike a blow to Twitter’s non-ad sales — and its goal of doubling revenue by 2023.
Zooming out: Musk has a lot of support on his side against Apple’s fees: developers like Fortnite maker Epic Games, Spotify and Tinder owner Match have criticised the fees (and launched legal battles against Apple).
However, antagonising the world’s most valuable company — which makes the smartphones that millions use to browse Twitter — could have negative consequences.
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