Group 2: Analyse the strategy Of Prudential and HSBC after the announcement of the Brexit

The Brexit have been a shock for the financial market in U.K. This announce have been not predicted by the market which are sure that it will not occur. U.K market is today in the incertitude that’s why some company have to adapt their strategy in order to decrease the impact of the Brexit; this is the case for Prudential & HSBC. First, we going to see which strategy choose Prudential since the Brexit announcement, then we looking the strategy of HSBC before comparing the two strategy that these company have chosen.

Prudential Strategy

Who is Prudential?

Prudential plc is a British multinational life insurance and financial services company headquartered in London, United Kingdom. It was founded in London in May 1848 as The Prudential Mutual Assurance Investment and Loan Association to provide loans to professional and working people. Today, Prudential UK division has around 7 million customers and is a leading provider of life insurance and pensions in the UK.

What is their strategy?

According to the Independent Prudential is going to relocate all  has said it is considering shifting funds from M&G, its assets management business, to Dublin or Luxembourg following UK’s vote to leave the EU.A tenth of Prudential’s M&G’s £255.4 billion in assets under management are from EU clients.

Whoever this decision is not acted, all will depend of the negotiation that will occur between U.K. and the E.U. The company is already set up in country as Dublin & Luxembourg and already 87% of its business come from outside the EU. For Prudential’s Manager, the effect on the Brexit would be “Manageable”. Moreover, the company continue to invest in Asia, where the market knows a strong growth and that is helping Prudential to offset lower profits in Europe.

On the other hand, the company admitted in a statement accompanying its first-half results that its UK-domiciled operations (including its fund management arm M&G) could be negatively impacted by Brexit.

Thanks to these different information, the strategy of Prudential can be sum-up clearly: Wait & See what is going on during the negotiation and if the context is not favourable relocate a big part of their found inside country where they are well implanted (Dublin, Luxembourg).

Sum-up of Prudrential perspectives concerning Brexit

 

HSBC Strategy

Who is HSBC?

HSBC Bank plc is one of the largest banking and financial services organisations in the world. HSBC’s international network comprises around 7,500 offices in over 80 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

What is their strategy?

Since the announcement of the Brexit and more particular since few days the strategy of HSBC become clear the U.K bank want to relocate his employment.

Indeed, HSBC is planning to move up to 1,000 staff from the UK to Paris due to Britain’s narrow vote to leave the EU.The leading global bank, which has assets worth $2.6 trillion (£1.9 trillion), has said it will relocate the jobs if the UK leaves the single market, a possible outcome of post-Brexit negotiations, according to the BBC. It is possible the UK could leave the EU but remain a part of the European Economic Area (EEA), in a model like that of Norway, Iceland and Liechtenstein. It is thought the staff to be relocated would be those who process euro payments for HSBC in Canary Wharf.

Among others, Morgan Stanley, BNP Paribas and JPMorgan have also reportedly made plans to reduce their UK operations following the vote to Brexit, the Independent reports. HSBC currently employs around 48,000 people in the UK, and around 260,000 across the world.HSBC, which carries out a significant amount of its business in Asia, considered moving its headquarters to Hong Kong earlier this year.

But the company decided to remain in London in part due to the city’s status as the main financial centre of Europe. Douglas Flint, HSBC’s chairman, said: « The work to establish fresh terms of trade with our European and global partners will be complex and time consuming.

« We will be working tirelessly in the coming weeks and months to help our customers adjust to and prepare for the new environment. »

Prudential vs HSBC Strategy

Since the Brexit lot of financial place around the world and more particularly in Europe make a big eye to the “City” of London and try to attract them.

We can see that the strategy of these two group are very similar and could be sum-up in 3 main point :

  • Waiting the end of the negotiation between UK & E.U to see if U.K stay inside the EEA.
  • Continuing their investment in Asia where the continent knows a strong growth.
  • Relocate a part of their activity & their employment inside the central E.U if Prudential choose Dublin & Luxembourg. HSBC prefer chose Paris.

Source:

http://www.independent.co.uk/news/uk/home-news/brexit-hsbc-economy-banks-eu-referendum-latest-jobs-single-market-effects-a7104351.html

https://www.fundstrategy.co.uk/hsbc-move-1000-jobs-london-brexit/

http://www.independent.co.uk/news/business/news/brexit-latest-news-eu-referendum-prudential-mg-insurance-fund-management-assets-a7183021.html

https://investment.prudential.com/wps/portal/pipub?uri=urlmap:learningCenter.brexit:vig.T1&pageId=3224

 

 

 

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