Keeping the branches is too costly, BEA says.
Hong Kong’s largest bank is will close 22 brokerage outlets and lay off 180 staff in a bid to rein in expenses at a time of lacklustre revenue growth.
The bank’s wholly-owned subsidiary East Asia Securities Company Limited (EAS) will close all of its 22 retail outlets in Hong Kong by 8 th July 2016.
BEA said that EAS will continue to provide service to customers through telephone and electronic channels such as the internet, mobile applications and automated phone service.
“Due to the increasing popularity of electronic and phone trading, which currently facilitates over 90% of EAS’s transactions, maintaining retail outlets to provide counter trading services has become very costly for EAS. In addition, there is a duplication of resources in securities business operations between EAS and the Bank,” BEA said in a statement.
According to a report by UOB Kay Hian, the measures will improve earnings by around 1% in 2016, which is unlikely to compensate for the bank's weak earnings outlook.
"In our view, the retrenchment exercise may signal that its operation remained weak in 1Q16, given the still-challenging economic environment in the mainland," said UOB Kay HIan.
UOB Kay Hian reckons that BEA is likely to roll out more cost-cutting measures in coming quarters to mitigate its sliding earnings.
“We would not be surprised if there are further streamlining measures carried out given the lacklustre revenue outlook.We deem a sale of the bank unlikely given its recent strategic review to dispose of non-core assets and the bank’s shareholding structure,” UOB Kay Hian said
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