ALEX BRUMMER: HSBC is an easy target for Rishi

There are few better ways to understand the global economy than watching the UK’s biggest bank in action.

Noel Quinn-led HSBC has pulled out of France and is exiting Canada and Greece.

With its large presence in China and the Pacific, its headquarters and retail bank in the UK, and being the main channel for moving money from Hong Kong to New York, it is an important barometer of the state of the world.

HSBC’s underlying third-quarter profit of £5.4bn shows rising interest rates mean banks that manage to curb bad loans in the recession will turn into ATMs.

HSBC upgraded its full-year 2022 net interest forecast to £28.3bn and to £31.9bn in 2023.

It’s hard to think that Rishi Sunak and his chancellor, Jeremy Hunt, won’t see this as a “windfall” to raid as they seek to close the gap in public finances.

The size of HSBC’s balance sheet means it will be one of the biggest beneficiaries of a widening interest rate margin. He also has issues to deal with.

HSBC may not have fallen victim to China’s biggest real estate bankruptcy when Evergrande began struggling with a mountain of debt last year, but the gloom that has engulfed the region’s property sector requires big reserves for future losses.

An episode with Liz Truss in 10th place and volatility in UK financial markets also meant a modest £177m.

Quinn is reforming the bank with its largest 8.3 percent shareholder Ping An, which has close ties to Beijing, looking over its shoulder.

The Chinese insurer wants HSBC to separate its Asian operations from the rest. The reality is that HSBC, although very important in the Pacific region, has a unique role in connecting the Far East with the financial centers of New York and London.

The bank is coy about why it decided to replace finance chief Ewan Stephenson, a refugee from RBS (now NatWest), and insists it had nothing to do with strategy.

His replacement by George Elkhedery, co-head of global banking and markets, may well be a signal to Ping An about the importance of investment banking and trading. Moreover, in HSBC fashion, it signals a succession structure when Quinn ends his spending spree.

Over the years, HSBC has often threatened to move its headquarters from London to Asia. The prospect of another bank tax will raise an outcry.

However, political repression in Hong Kong and increasing authoritarianism in Beijing make it imperative that HSBC continues to have an alternative identity and regulatory framework to the Bank of England.

Old hand

At the age of 80, American activist Nelson Peltz – unlike his president, Joe Biden – shows no signs of succumbing to the ravages of age.

Over the decades, he has made a habit of shaking up the fast-moving consumer goods sector. His fingerprints can be seen all over Mondelez (owner of Cadbury), Schweppes (now part of Coke), Kraft Heinz, Nestle and Proctor & Gamble.

Not surprisingly, when the veteran dealmaker knocked on Unilever’s door, the board decided to let him in. He was considered more dangerous outside of Blackfriars than inside.

By the time Peltz arrived, chief executive Alan Jobe had made his failed pass at what is now Haleon (GSK’s consumer healthcare division) and had instituted a reorganization. Some believe that the latter came too late for Joppe to extend his life in the top job. A search is underway for a successor.

Historically, Unilever has preferred internal appointments. However, with Peltz’s network of contacts in the food and related industries, it’s no wonder he’s looking for names.

Unilever is not known for modest pay levels. However, poaching from the US, where executive salaries and bonuses are in the stratosphere, can be difficult. You can’t blame Peltz for trying. But the nominating committee, led by chairman Nils Andersen, must feel empowered.

Second hand

Watchers of The Apprentice know that pre-owned clothing is a hot online category.

Figures from hipster tech bank Revolut show the entire vintage sector is booming, with sales of antique furniture up 71 per cent, spending on vinyl records up 17 per cent and sales of used glass up 29 per cent.

Who needs shiny new things?