Analyze the strategy of prudential and HSBC after the Brexit announcement
Brexit: an economic issue?
Firms and investors in many non-European Union countries have been using Britain as a gateway to Europe, benefitting from the zero-tariff environment and free movement of labour and capital. Accordingly, the main fear here seems to be that, if the United Kingdom voted to leave, foreign direct investment inflows would dry up and parent companies may even close-up shop and move production or offices elsewhere. In addition, given that foreign multinationals tend to be productivity-enhancing, bringing with them new technologies and management practices, a drying up of this investment into Britain could be damaging for the country’s long-term potential.
Prudential is an international financial services group
Their strategy: to focus on the Asian Market
“Our strategy is simply to pursue growth in growing markets,” Thiam, 52, said on the conference call with journalists. “In the U.K. and the U.S. we don’t target growth, it depends on the environment.”
Prudential operates throughout Asia including Hong Kong, China, Singapore, Indonesia, Malaysia and Vietnam. Sales in the region have grown for 22 consecutive quarters, the company said today.
In asset management, U.K.-based M&G reported an 8 percent increase in external funds under management to 139.5 billion pounds while in Asia, the Eastspring unit saw new third-party inflows more than double to 2.3 billion pounds.
The shares fell 0.8 percent to 1,599.5 pence at 2:56 p.m. in London, trimming the insurer’s gain this year to 7.2 percent.
HSBC Holdings PLC is a British multinational banking and financial services holding company headquartered in London, United Kingdom
Their strategy to move some part of employement from London
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.
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.
In February Douglas Flint had indicated move 1000 jobs out of London But he qualifies this scenario as an“extreme” scenario.
“If you look at elements of the wholesale business which depended upon passporting rights, if you thought we were going to lose all of those passporting rights, to take one extreme, it could be up to 1,000 jobs,” he told TheCityUK’s annual conference in London.
“It is impossible to answer a hypothetical question because it depends on the access that we have [to EU markets].
We can see that both strategy is to reduce their market in the UK but they still remain there. They want to maintain relation with the EU and want profit so prudential go to the growing market of Asia and HSBC prefer Paris.
Brexit has certainly impact on banks like Prudential and HSBC. The banks are
worried about Britain leaving the European Union — known as a Brexit
because not only would it have to deal with the economic fallout like the rest of the sector, it is also uniquely placed in suffering from a second potential Scottish independence referendum after that