- Lender to shut all of securities unit’s retail branches
- BEA to cut jobs equal to 3.8% of Hong Kong headcount
Bank of East Asia Ltd., the largest family-run bank listed in Hong Kong, has embarked on a cost-cutting effort that will see the lender close all of its securities unit’s branches and shed about 180 jobs.
The bank will shut East Asia Securities Co.’s 22 retail outlets in Hong Kong by July 8, BEA said in an e-mailed statement Thursday. Following a review of its businesses, the lender will seek to streamline its operations through various means including automation, it said. The resulting job cuts account for 3.8 percent of the bank’s headcount in Hong Kong, the company said.
Electronic and phone trading facilitates more than 90 percent of the securities unit’s transactions, and the business will continue to provide services through those channels, BEA said. Maintaining retail outlets to provide trading services has become very costly and there’s a duplication of resources in securities business operations between the brokerage and the bank, it said.
The firm’s streamlining effort is poised to reduce its cost-to-income ratio, which rose to 57 percent in 2015 from 54 percent a year earlier. The bank introduced a headcount freeze in February as it reported a 17 percent decline in 2015 profit amid higher bad loans in China.
BEA’s shares rose 0.5 percent to HK$28.70 as of 10:44 a.m. Thursday in Hong Kong. The lender’s travails in China helped drag the stock to a seven-year low in February. While it has risen 37 percent since then, it still trades below the value of the bank’s assets, at 0.9 times book.
Billionaire Paul Singer’s Elliott Management Corp. has in recent months called on Bank of East Asia to consider selling itself in order to deliver “proper value” to shareholders, a demand that the Hong Kong bank has rejected. The New York-based firm has accused Li and his board of mismanagement and improperly representing shareholder interests.