London-headquartered HSBC is reportedly reviewing its China digital wealth business – Pinnacle – over cost-related issues including salaries and supplier expenses.
HSBC is reviewing costs and operational controls at Pinnacle, according to a «Reuters» report citing unnamed sources. The review was started after the appointment of global insurance CEO Ed Moncreiffe in April.
Launched in 2020, Pinnacle is the bank’s digital wealth business in China that sells insurance and fund products. According to business registration records, $390 million have been injected into the two main operating legal entities of Pinnacle in China since 2020. As of June, it employed at least 1,700 personal wealth planners with plans to grow headcount to 1,900 by the end of 2024.
Supplier Expenses
One of the issues under review is related to multiple incidents of potentially inaccurate expenses incurred by the division, mainly involving suppliers. In one instance, an external event management firm charged Pinnacle for more than two dozen customer engagement and promotional events in one day.
HSBC is trying to establish whether such expenses violated internal rules.
Salary Structure
Another issue being reviewed is staff salary structures with salespeople at Pinnacle earning fixed salaries that are relatively higher than others in the industry. This is believed to limit incentives to increase sales. The review could result in layoffs.
A spokesperson for HSBC declined to comment.
Separately, the bank is planning cost-cutting measures under its new CEO, Georges Elhedery, that could save up to $300 million by reducing top management layers, according to a «Financial Times» report.
