Market Loop - 🔗HSBC scales back

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1st December 2022

Bite-sized business news from the UK and beyond

Good morning It’s the beginning of December which means that Spotify has unveiled its 2022 Wrapped campaign, revealing the platform's most streamed songs and artists of the year for its 456m users.

Harry Styles' "As It Was" was the most streamed song, reaching 1.6bn streams worldwide, earning him and co-writers more than £1.5m in royalties.

Today's stories

HSBC scales back
Musk picks a fight with Apple

BANKING
HSBC scales back

What happened?
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

TECH
Musk picks a fight with Apple

What happened?
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.

Stat of the day

Thurrock local council in Essex is calling for a government bailout after a series of disastrous investments left it with a £500m financial black hole

Interesting links from around the web

This year's Forbes 30 Under 30 list
The 3 pillars of a toxic workplace
What else Qatar has built with its absurd wealth besides the 2022 World Cup

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slower growth western assets high growth Asian business Chinese insurer Ping Am Bitesized business news falling share price British banking regulators biggest bank RBC banking giant HSBC

Market Loop - 🔗HSBC scales back

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