HSBC May Cut Managers, China Economic Dissent & Burberry's FTSE Future | Bloomberg Daybreak:...

[Music] Bloomberg audio Studios podcasts radio news this is the Bloomberg Daybreak Europe podcast available every morning on Apple Spotify or wherever you listen it's Wednesday the 28th of August in London I'm Steven Carol coming up today hsbc's incoming CEO considers cutting management layers in a sweeping overhaul of the bank China's economic challenges drive an increase in protests over work and housing plus an increasingly checkered Outlook leaves berbery facing the end of HSBC considering plans that could remove layers of middle management at Europe's largest bank Bloomberg understands incoming CEO Jor Al hedri is looking at making cuts that would mirror similar moves at Rivals City group and Standard Chartered our our colleague Adam ha has the details this is the first sign of what we're seeing from the new CEO and really wanting to make his Mark early on in terms of the cost control so what we know at this point is that it's likely to affect middle management roles so that could include country head type roles in some of its Global Network but there's still uncertainty as to how this plays out and of course these plans are potentially subject to change of course as well Adam ha and the team behind the exclusive Bloomberg reporting say El HRI is also likely to make changes to the executives and roles that will report to him after he takes on the top job next month the discussions are the latest sign that the bank is looking to re in costs as rate Cuts threaten the margins of global lenders like HSBC spokesperson for the bank declined to comment on the story protests are on the rise in China as the effects of a slowing economy rattle citizens figures in the China descent monitor from the US advocacy group freed Freedom House show cases of descent increased 18% in the second quarter compared to the same period last year according to the report the majority of protests were linked to economic issues with 44% related to labor and more than 20% involving AG grieved homeowners although the report doesn't provide a full picture it does offer a Snapchat of sentiment across China as the country grapples with slowing GDP growth a real estate crisis and an expanding trade war with the United States Joe Biden's top National Security Aid has met with Chinese foreign minister wangi in Beijing Jake Sullivan is the first US National Security adviser to visit the country since 2016 the two held a full day of talks on the outskirts of the capital wangi says the cooperation is the goal over the past few years bilateral relations have gone through twists and turns the key is to keep the overall direction of mutual respect peaceful coexistence and a win-win cooperation implementing the common understanding between our two presidents as their the San Frisco meeting is our important responsibility China's foreign minister wangi there speaking through a translator Sullivan's trip comes just months before the US Presidential vote in November both candidates in that race are set to maintain a tough stance on China but Republican Donald Trump has threatened a blanket 60% tariff on imports from the country 4100 veteran Burber is set to exit The Benchmark index it comes after an industrywide slowdown and a faltering brand revamp Bloomberg's TI adabo has the details known as a Hallmark of British apparel bbery could be set to bid farewell to the country's Financial big leagues according to a footy Russell statement the stock will likely drop down to the midcap 250 index at September's quarterly rebalancing shares have slumped by a third in the last 3 months hampered by a softer Chinese market but efforts to revitalize the brand with a return to its British route also stalled as the company faced a recent profit warning insur hiscox and Real Estate Investment Trust TRX could be candidates to take burber's spot in the Blue Chip Benchmark final changes to the lineup will be announced on September 4th after European markets close in London tiwa adabo Bloomberg Radio the UK and Germany are working on a major new treaty Bloomberg has learned negotiations will involve cooperation on defense technology and clean energy James walock has more less than a week after Labour's July election win foreign secretary David Lamy landed in Berlin now starma himself heads to Germany in one of his first foreign policy initiatives the goal is a major bilateral agreement potentially even matching Britain's joint military training with France sources tell Bloomberg that negotiations are unlikely to be completed before next year but both sides are looking to have a deal on security within the next few months in London James wock Bloomberg Radio the number of UK properties up for sale has hit its highest level in s years zuper says demand from buyers is rising as a recovering economy boosts consumer confidence industry experts point to political stability and expected interest rate Cuts as signs of future growth in a moment we'll bring you more on our story on HSBC and the Planned steps being taken by the new CEO plus more details on that report about descent in China but first will you be joining the Scramble for Oasis tickets when they go on sale on Saturday the long awaited reunion of the Gallagher brothers already starting a frenzy among fans desperate for tickets for their UK and Ireland dates next summer Bloomberg's Charlie Wales has been speaking to some of those who be opening multiple devices for the online queue including some who say they'll pay whatever it costs to get in interestingly Charlie also points to the winder trend of people spending more on experiences like concerts since the pandemic think Adele and Munich or the Taylor Swift eras tour one study in the US found those who are considered to be gen Z and Millennials have spent at least $500 on tickets for Live Events and another 38% were willing to take on debt for such a discretionary purchase so we'll be seeing how manages to win out when tickets go on sale on Saturday morning and crucially how much they're willing to pay uh for those prize seats let's bring you more now on our top story source is telling Bloomberg that hsbc's incoming CEO Jor Al hedri is considering stripping layers of middle management including cutting the number of country heads our senior Asia Finance correspondent amberine chowri was part of the team that broke the story she joins us now for more Amber great to have you with us what are the changes then being considered by Jor Al HRI so as you say the new incoming uh CEO George's ledri basically examining plans that could remove layers of middle management uh at Europe's largest banks and that's sort of mimicking similar moves undertaken by Wall Street uh Rivals such as City and of course you have the smaller Asian uh Focus rival Standard Chartered who's uh made similar moves along the same lines and as part of these uh discussions the London base lender could potentially cut the number of country heads operating across its worldwide Network um according to our sources uh the new CEOs are also likely to make changes ultimately to also the number a number of Executives and roles that report directly to him um and he's due to take the Reigns next month uh but this whole scenario is at the moment just under discussion um and as part of that nothing has been finalized what's thought to be the reasoning behind the these changes being considered so these discussions are the latest sign that HSBC is basically looking to cut costs uh as Central Bankers around the world begin to cut interest rates threatening the profits of big Global lenders like HSBC uh in recent months the bank has started to slow hiring so they're get getting ready for all this basically and asking Bankers to be more Vigilant about their travel and entertainment spending I mean we've reported this previously that Bankers have been told to cram in lots of client meetings within the Working Day and ultimately they're just a massive you know BL uh global banking lender that needs to cut costs and complexity across its many different businesses around the world now n Quinn you know as the current CEO had already started a process of of reorganizing hsbc's operations doing things like selling off uh the operations in places like France will this be seen as a continuation of that strategy or is it a marked change in Direction well in terms of uh non-core asset sales it it'll be continuing what uh n started so you know HSBC just to pull back a l little it's just m massive it's got um approximately 41 million customers and operates in 60 countries and jurisdictions and as you say they've been disposing of major businesses in North America and Europe uh namely the French and Canadian businesses recently and it what it is doing is redeploying capital and this was part of n strategy as well particularly to Southeast Asia and China and making a deeper push into some fast growing Asian markets um and last week uh we reported that the bank is in the process of offloading its South African business so that's something that uh we should see uh you know in happening under the new CEO Georgia ced's uh tin now Amber as we look ahead to that kind of Handover of of power next week at HSBC as well aside from this reorganization and the cost cutting what are going to be the other key challenges that Al hedri is going to be facing as he takes on this this massive job right well um you know cost is at the center of um you know their strategy in the coming years their their expenses in the recent reported quarters have may been at a relatively high level and they've remain it's remained fairly static so the new CEO really needs to focus in that and they operate in so many countries and territories um so they need to cut complexity for a variety reasons and finally uh and a very important point for HSBC you know they they continually juggling the geopolitical tensions between China and the West it's long been an issue for you know a big multinational like hspc although it's headquartered in London it generates most of its earnings in North Asia so that's going to be a big um uh diplomatic challenge for the new CEO who starts next week okay Plenty to follow on that amarine chadri our senior Asia Finance correspondent thank you very much for joining us uh with the details of that story and that exclusive reporting from Bloomberg about some of the changes being considered as they await that change in CEO well meanwhile protests in China are on the rise as the effect of a slowing economy rattle citizens figures in the China descent monitor a US advocacy group show cases of descent Rising 18% in April and June compared to last year the majority of those linked to economic issues for more let's speak to Jenny Marsh who leads our team covering economics and government in Greater China Jenny good to have you with us what form does this descent take so these are really sort of um small instances of descent um that desent monitor carefully combed through public reports and social media to capture so this can be anything from sort of hanging a banner in the street uh an individual doing that as a means of protest um disputes in online public spaces or just like sort of Acts of non-cooperation with authorities and they're generally looking for things that have high visibility that have gone a bit viral um and also carry the risk of rep reprisal so you know things that essentially the Chinese government wouldn't want sort of taking hold in any big way across the country how is this linked to the weaker economic picture in China I mean of these economic protests they F they mostly focus on property issues and then it was Labor and so all these things are sort of you know mixed together um you know we saw the record Plunge in PDD shz this week um and this is sort of reflective of this price for now that companies have looked into as you the consumer is becoming increasingly reluctant to spend you know and that's because of this sort of protracted property crisis that is still kind of rolling on in China and you know the majority of Chinese people store their household wealth in property is sort of the big thing that everybody invests in so when people feel like their property prices are going down they're fitting poorer that's causing them to spend less that in turn is sort of um G Aon effect on companies which is sort of making the job market less Dynamic and vibrant so they're sort of in this like cycle now of sort of the malays you know we saw youth unemployment uh took up again for the first time last month since February and even manufacturing which has been sort of a bright spot in the economy softened um in the second quarter um you know and more and more tariffs have been imposed what cender announced earlier this week too 100% tariffs now on EV so I think it's just reflective of sort of the the pressures that are facing the Chinese economy coming in from all directions so I I take your point that's a lot of these what incidents that are being considered to sent are quite minor but do they reach a level that are likely to provoke provoke a reaction from Chinese authorities I think you know and the report authors are quite clear about this like these sort of um episodes of descent while they're Rising they're not going to reach the bar of the sort of Co protest that you saw at the end of 2022 which like forced president xiin ping to rethink his whole Co Zer strategy like they are nowhere near the tenor or scale of that but they are increasing and I think what it does is put pressure on local governments it's going to make it harder for them to push through policies and it just creates a sort of friction in society the government is going to have to deal with you know there's this sort of idea in China that the the contract between the Communist party and the public is based on the fact that the Communist Party can provide you know increasing prosperity in a better standard of living tomorrow than they had yesterday and if that sort of those prospects dim then is a much harder population for the the Communist Party to govern essentially so it's bringing fresh challenges to the government but it's you know to be clear it isn't anything near sort of to something that might threaten the regime but of course you know looking at this from a more macro point of view and and you outlined some of the the recent weakness and illustrations of weakness in the Chinese economy are there expectations that in terms of doing things to boost the economy that there could be more to come from Beijing you know that we're still waiting to see what China's government does they've been very clear that they don't want to sort of go back to the Bo and bus cycles that were heavily reliant on debt um but you know Economist calls are growing for the government to do more to spend more so we had a chorus of economists I think last week calling for the government to raise um the budget deficit ratio um more economists than are saying you know giving consumers direct handouts would be like a very impactful sort of immediate way to boost the consumer but you know I think president xinping and his economic officials have been clear that they don't want to make sort of big moves um and sort of resort to Big stimulus so everything is kind of incremental so you know I think for now as they transition the economy away from one that was riant on property and they try and sort of build these big high-tech sort of Powerhouse companies to sort of propel the economy they're happy with a little bit less growth with a little bit of a painful period if that gets them to their bigger goal and for them the challenge I suppose is managing this sort of um unrest the sort of malays within the population as they make that transition this is Bloomberg Daybreak Europe your morning brief on the stories making news from London to Wall Street 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