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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. They say it's the

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Speaker 1: Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify

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Speaker 1: or wherever you listen. It's Wednesday, the twenty eighth of

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Speaker 1: August in London. I'm Stephen Carroll coming up today. HSBC's

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Speaker 1: incoming CEO considers cutting management layers and a sweeping overhaul

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Speaker 1: of the bank. China's economic challenges drive an increase in

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Speaker 1: protests over work and housing, plus an increasingly checkered out

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Speaker 1: look leaves Berbery facing the end of HSBC is considering

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Speaker 1: plans that could remove layers of middle management at Europe's

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Speaker 1: largest banks. Bloomberg understands incoming CEO, Jeangel Hendrie is looking

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Speaker 1: at making cuts that would mirror similar moves at rivals

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Speaker 1: City Group and Standard Chartered. Our colleague Adam Haig has

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Speaker 1: the details.

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Speaker 2: This is the first sign of what we're seeing from

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Speaker 2: the new CEO and really wanting to make his mark

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Speaker 2: early on in terms of the cost control. So what

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Speaker 2: we know at this point is that it's likely to

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Speaker 2: affect middle management roles, so that could include country head

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Speaker 2: type roles in some of its global network. But there's

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Speaker 2: still uncertainty as to how this plays out, and of

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Speaker 2: course these plans are potentially subject to change of course,

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Speaker 2: as well.

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Speaker 1: Adam Hagan, the team behind the exclusive Bloomberg reporting sale.

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Speaker 1: Hendry is also likely to make changes to the executives

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Speaker 1: and roles that will report to him after he takes

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Speaker 1: on the top job next month. The discussions are the

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Speaker 1: latest sign that the bank is looking to rein in

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Speaker 1: costs as rape cuts threaten the margins of global lenders

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Speaker 1: like HSBC. A spokesperson for the bank declined to comment

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Speaker 1: on the story. Protests are on the rise in China

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Speaker 1: as the effects of a slowing economy rattle citizens. Figures

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Speaker 1: in the China Descent Monitor from the US advocacy group

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Speaker 1: Freedom House show cases of descent increased eighteen percent in

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Speaker 1: the second quarter compared to the same period last year.

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Speaker 1: According to the report, the majority of protests linked to

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Speaker 1: economic issues, with forty four percent related to labor and

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Speaker 1: more than twenty percent involving aggrieved homeowners. Although the report

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Speaker 1: doesn't provide a full picture, it does offer a snapshot

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Speaker 1: of sentiment across China as the country grapples with slowing

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Speaker 1: GDP growth, a real estate crisis, and an expanding trade

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Speaker 1: war with the United States. Joe Biden's top national security

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Speaker 1: aid has met with Chinese Foreign Minister Wang Yi in Beijing.

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Speaker 1: Jake Sullivan is the first US national security advisor to

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Speaker 1: visit the country since twenty sixteen. The two held a

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Speaker 1: full day of talks on the outskirts of the capitol.

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Speaker 1: Wangi says the cooperation is the goal.

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Speaker 3: Over the past few years, bilateral relations have gone through

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Speaker 3: twists and turns. The key is to keep the overall

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Speaker 3: direction of mutual respect, peaceful co resistance in a win

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Speaker 3: win cooperation, implementing the common understanding between are to president

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Speaker 3: as There's saying political meeting is our important responsibility.

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Speaker 1: China's Fire Minister Wangi there, speaking through a translator. Sullivan's

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Speaker 1: trip comes just months before the US presidential vote in November.

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Speaker 1: Both candidates and that race are set to maintain a

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Speaker 1: tough stance on China, but Republican Donald Trump has threatened

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Speaker 1: a blankets sixty percent tariff on imports from the country.

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Speaker 1: Forty one hundred veteran Burbery is set to exit the

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Speaker 1: Benchmark Index. It comes after an industry wide slowdown and

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Speaker 1: a faltering brand revamp. Bloomberg's Tiwa Adebayo has the details.

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Speaker 4: Known as a hallmark of British apparel, Berbery could be

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Speaker 4: set to bid farewell to the country's financial big leagues.

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Speaker 4: According to a foot Sea Russell statement, the stock will

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Speaker 4: likely drop down to the MidCap two fifty index at

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Speaker 4: September's quarterly rebalancing. Shares have slumped by a third in

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Speaker 4: the last three months, hampered by a softer Chinese market,

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Speaker 4: but efforts to revitalize the brand with a return to

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Speaker 4: its British route also stalled as the company faced a

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Speaker 4: recent profit warning. Insurer his Cos and real estate investment

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Speaker 4: trust Tritex could be candidates to take Burbery spot in

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Speaker 4: the blue Chip Benchmark. Final changes to the lineup will

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Speaker 4: be announced on September fourth, after European markets close. In London,

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Speaker 4: TWA Dubaio Bloomberg.

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Speaker 1: Radio, the UK and Germany are working on a major

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Speaker 1: new treaty. Bloomberg has learned. Negotiations will involve cooperation on defense,

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Speaker 1: technology and clean energy. James Wilcock has more.

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Speaker 5: Less than a week after Labour's July election win, Foreign

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Speaker 5: Secretary David Lammy landed in Berlin. Now Starmer himself heads

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Speaker 5: to Germany in one of his first foreign policy initiatives.

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Speaker 5: The goal is a major bilateral agreement, potentially even matching

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Speaker 5: Britain's joint military training with France. Sources tell Bloomberg that

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Speaker 5: negotiations are unlikely to be completed before next year, but

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Speaker 5: both sides are looking to have a deal on security

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Speaker 5: within the next few months. In London, James Wilcock Bloomberg Radio.

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Speaker 1: The number of UK properties up for sale has at

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Speaker 1: its highest level in seven years. Zoopla says demand from

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Speaker 1: buyers is rising as a recovering economy boosts consumer confidence.

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Speaker 1: Industry experts point to political stability and expected interest rate

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Speaker 1: cuts as signs of future growth. In a moment, we'll

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Speaker 1: bring you more on our story on HSBC and the

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Speaker 1: planned steps being taken by the new CEO, plus more

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Speaker 1: details on that report about dissent in China. But first,

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Speaker 1: will you be joining the scramble for Oasis tickets when

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Speaker 1: they go on sale on Saturday? The long awaited reunion

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Speaker 1: of the Gallagher brothers already starting a frenzy among fans

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Speaker 1: desperate for tickets for their UK and Ireland dates next summer.

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Speaker 1: Bloomberg's Charlie Wells has been speaking to some of those

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Speaker 1: who will be opening multiple devices for the online que,

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Speaker 1: including some who say they'll pay whatever it costs to

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Speaker 1: get in. Interestingly, Charlie also points to the wider trend

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Speaker 1: of people spending more on experiences like concerts since the pandemic.

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Speaker 1: Think Adele and Munich or the Taylor swift Eras tour.

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Speaker 1: In the US and those who are considered to be

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Speaker 1: gen Z millennials have spent at least five hundred dollars

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Speaker 1: on tickets for live events, and another thirty eight percent

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Speaker 1: we're willing to take on debt for such discretionary purchase.

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Speaker 1: So we'll be seeing how manages to win out when

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Speaker 1: tickets go on sale on Saturday morning, and crucially, how

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Speaker 1: much they're willing to pay for those prize seats. Let's

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Speaker 1: bring you more now in our top story, sources telling

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Speaker 1: Bloomberg that HSBC's incoming CEO, jeanghe Al Hedri, is considering

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Speaker 1: stripping layers of middle management, including cutting the number of

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Speaker 1: country heads. Our senior Asia Finance correspondent amber And Chowdry

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Speaker 1: was part of the team that broke the story. She

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Speaker 1: joins us now for more, Ambering, great to have you

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Speaker 1: with us. What are the changes then, being considered by

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Speaker 1: Jeane al Hedrie.

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Speaker 6: So, as you say, the new incoming CEO, Georges Aledris

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Speaker 6: basically examining plans that could remove layers of middle management

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Speaker 6: at Europe's largest banks, and that's sort of mimicking similar

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Speaker 6: moves undertaken by Wall Street rivals such as City, and

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Speaker 6: of course you have the smaller Asian focused rival Standard Chartered,

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Speaker 6: who's made similar moves along the same lines. And as

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Speaker 6: part of these discussions, the London based lender could potentially

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Speaker 6: cut the number of country heads operating across its worldwide network.

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Speaker 6: According to our sources, the new CEOs are also likely

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Speaker 6: to make changes ultimately to also the number of executives

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Speaker 6: and roles that report directly to him, and he's due

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Speaker 6: to take the reins next month. But this whole scenario

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Speaker 6: is at the moment just under discussion, and as part

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Speaker 6: of that nothing has been finalized.

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Speaker 1: What's thought to be the reasoning behind these changes being considered.

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Speaker 6: So these discussions are the latest sign that HSBC is

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Speaker 6: basically looking to cut costs as central bankers around the

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Speaker 6: world begin to cut interest rates, threatening the profits of

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Speaker 6: big global lenders like AC. In recent months, the bank

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Speaker 6: has started to slow hiring, so they're getting ready for

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Speaker 6: all this basically and asking bankers to be more vigilant

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Speaker 6: about their travel and entertainment spending. I mean we've reported

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Speaker 6: this previously that bankers have been told to cram in

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Speaker 6: lots of client meetings within the working day. And ultimately

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Speaker 6: they're just a massive, you know, global banking lender that

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Speaker 6: needs to cut costs and complexity across its many different

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Speaker 6: businesses around the world.

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Speaker 1: Now, nol Quinn, you know, as the current CEO had

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Speaker 1: already started a process of a sort of reorganizing HSBC's operations,

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Speaker 1: doing things like selling off the operations in places like France.

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Speaker 1: Will this be seen as a continuation of that strategy

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Speaker 1: or is it a marked change in direction.

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Speaker 6: Well, in terms of non core asset sales, it'll be

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Speaker 6: continuing what Noel started. So, you know, HSBC just to

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Speaker 6: pull back a litter a little. It's just massive. It's

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Speaker 6: got approximately forty one million customers and operates in sixty

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Speaker 6: countries and jurisdictions. And as you say, they've been disposing

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Speaker 6: of major businesses in North America and Europe, namely the

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Speaker 6: French and Canadian businesses recently. And what it is doing

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Speaker 6: is redeploying capital and this was part of Noll's strategy

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Speaker 6: as well, particularly to Southeast Asia and China and making

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Speaker 6: a deeper push into some fast growing Asian markets. And

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Speaker 6: last week we reported that the bank is in the

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Speaker 6: process of offloading its South African business. So that's something

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Speaker 6: that we should see you happening under the new CEO.

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Speaker 1: Georgia celebrities to new now I'm bring as we look

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Speaker 1: ahead to that kind of handover of power next week

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Speaker 1: at HSBC as well. Aside from this reorganization and the

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Speaker 1: cost cutting, what are going to be the other key

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Speaker 1: challenges that Eldri is going to be facing as he

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Speaker 1: takes on this massive job. Right well, costs.

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Speaker 6: Is at the center of you know, their strategy in

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Speaker 6: the coming years. Their expenses in the recent reported quarters

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Speaker 6: have may been at a relatively high level and they've

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Speaker 6: remained it's remained fairly static. So the new CEO really

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Speaker 6: needs to focus in that. And they operate in so

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Speaker 6: many countries and territories, so they need to cut complexity

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Speaker 6: for a variety of reasons. And finally, and a very

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Speaker 6: important point for HSBC, you know, they are continually juggling

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Speaker 6: the geopolitical tensions between China and the West. It's long

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Speaker 6: been an issue for you know, big multinational like HSBC.

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Speaker 6: Although it's headquartered in London, it generates most of its

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Speaker 6: earnings in North Asia. So that's going to be a

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Speaker 6: big diplomatic challenge for the new CEO who starts next week.

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Speaker 1: Okay, plenty to follow on that amberin Chowdry, our senior

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Speaker 1: Age of Finance correspondent, thank you very much for joining

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Speaker 1: us with the details of that story and that exclusive

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Speaker 1: reporting from Bloomberg about some of the changes considered as

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Speaker 1: they await that change in CEO. Well, meanwhile, protests in

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Speaker 1: China are on the rise as the effects of a

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Speaker 1: slowing economy rattle citizens. Figures in the China Descent Monitor

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Speaker 1: US advocacy group show cases of descent rising eighteen percent

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Speaker 1: in April and June compared to last year, the majority

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Speaker 1: of those linked to economic issues. For more, let's speak

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Speaker 1: to Jenny Marsh who leads our team covering economics and

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Speaker 1: government and Greater China. Jenny, good to have you with us.

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Speaker 1: What form does this descent take?

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Speaker 7: So these are really sort of small instances of descent.

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Speaker 7: The Descent Monitors were carefully combed through public reports and

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Speaker 7: social media to capture. So this can be anything from

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Speaker 7: sort of hanging a banner industry, an individual doing that

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Speaker 7: as a means of protest, disputes in online public spaces,

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Speaker 7: or just like sort of acts non cooperation with authorities.

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Speaker 7: And they're generally looking for things to sort of have

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Speaker 7: high visibility that have gone a bit viral and also

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Speaker 7: carry the risk of reprisal. So you know, things that

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Speaker 7: are centering the Chinese government wouldn't want sort of taking

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Speaker 7: hold in any big way across the country.

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Speaker 1: How is this linked to the weaker economic picture in China?

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Speaker 7: I mean, of these economic protests they mostly focus on

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Speaker 7: property issues, and then it was labor and so all

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Speaker 7: these things are sort of you know, mixed together. You know,

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Speaker 7: we saw the record plunging PDD shares this week, and

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Speaker 7: this is sort of reflective of this price one now

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Speaker 7: that companies are looked into as the consumer is becoming

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Speaker 7: increasingly reluctant to spend, you know, and that's because of

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Speaker 7: this sort of protracted property crisis that is still kind

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Speaker 7: of rolling on in China. And you know the majority

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Speaker 7: of Chinese people store their household wealth in property it's

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Speaker 7: sort of the big thing that everybody invests in. So

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Speaker 7: when people feel like their property prices are going down,

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Speaker 7: they're fitting poorer. That's causing them to spend less. That

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Speaker 7: in turn is sort of having gone a coun effect

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Speaker 7: on companies, which is sort of making the job market

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Speaker 7: less dynamic and vibrant. So they're sort of been this

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Speaker 7: like cycle now of sort of the malaise. You know,

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Speaker 7: we saw you th unemployment tick up again for the

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Speaker 7: first time last month since February, and even manufacturing, which

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Speaker 7: has been sort of a bright spot, and the economy

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Speaker 7: softened in the second quarter, you know, and more and

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Speaker 7: more tariffs have been imposed or Canada announced earlier this

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Speaker 7: week to one hundred percent tariffs now on ev So

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Speaker 7: I think it's just reflective of sort of the pressures

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Speaker 7: that are facing the Chinese economy coming in from all directions.

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Speaker 1: So I take your point that's a lot of these

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Speaker 1: what insidances that are being considered des center are quite minor,

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Speaker 1: but do they reach a level that are likely to

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Speaker 1: provoke a reaction from Chinese authorities?

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Speaker 7: I think, you know, the report authors are quite clear

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Speaker 7: about this, like these sort of episodes of descent while

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Speaker 7: they're rising. They're not going to reach the bar of

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Speaker 7: the sort of COVID protests that you saw at the

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Speaker 7: of twenty twenty two, which forced President's usion Pining to

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Speaker 7: rethink his whole COVID serioce strategy. Like, they are nowhere

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Speaker 7: near the tenor or scale of that, but they are increasing,

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Speaker 7: and I think what it does is for pressure on

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Speaker 7: local governments. It's going to make it harder for them

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Speaker 7: to push through policies, and it just creates a sort

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Speaker 7: of friction in society the government's going to have to

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Speaker 7: deal with. You know, there this sort of idea in

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Speaker 7: China that be the contract between the Communist Party and

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Speaker 7: the public is based on the fact that the Communist

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Speaker 7: Party can provide you know, increasing prosperity and a better

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Speaker 7: living tomorrow than they had yesterday. And if that sort

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Speaker 7: of those prospects dim then is a much harder population

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Speaker 7: for the Communist Party to govern. Essentially, so it's bringing

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Speaker 7: fresh challenges to the government, but it's you know, to

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Speaker 7: be clear, it isn't anything near sort of to something

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Speaker 7: that might threaten the regime.

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Speaker 1: But of course, you know, I'm looking at this one

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Speaker 1: more macro point of view, and you outline some of

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Speaker 1: the recent weakness and illustrations of weakness in the Chinese

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Speaker 1: economy are there are expectations that in terms of doing

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Speaker 1: things to boost the economy, that there could be more

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Speaker 1: to come from Beijing.

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Speaker 7: You know, we're still wanting to see what trans government does.

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Speaker 7: They've been very clear that they don't want to sort

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Speaker 7: of go back to the beam and bus cycles that

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Speaker 7: were heavily reliant on debt. But you know, economist calls

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Speaker 7: are growing for the government to do more, to spend more.

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Speaker 7: So we had a chorus of economists i think last

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Speaker 7: week calling for the government to raise the budget deficit ratio,

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Speaker 7: more economists than our saying, you know, giving consumers direct

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Speaker 7: handouts would be like a very impactful, sort of immediate

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Speaker 7: way to boost the consumer. But you know, they think

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Speaker 7: President Jusien Ping and his economic officials have been clear

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Speaker 7: that they don't want to make sort of big moves

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Speaker 7: and sort of resort to big stimulus, so everything is

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Speaker 7: kind of incremental. So, you know, I think for now,

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Speaker 7: as they transition the economy away from one that was

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Speaker 7: reliant on property and they try and sort of build

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Speaker 7: these big high techs of power house companies to sort

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Speaker 7: of propel the economy. They're happy with a little bit

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Speaker 7: less growth, with a little bit of a painful period

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Speaker 7: if that gets into their bigger goal. And for them,

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Speaker 7: the challenge just pose is managing this sort of unrest,

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Speaker 7: the sort of malaise within the population as they make

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Speaker 7: that transition.

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