HSBC has revealed it will cut 35,000 jobs over the next three years as part of a widespread overhaul,
HSBC has announced its most radical overhaul in years, unveiling plans to shrink its operations in the US and Europe and warning the coronavirus outbreak and unrest in Hong Kong could hurt its business in 2020. The London-based lender said it aims to cut annual costs by $4.5bn and shed $100bn of assets by the end of 2022 in an attempt to kick-start its stuttering business, The Financial Times reports.
HSBC said it expected the overhaul — the bank’s most radical since it narrowly survived a money-laundering scandal in Mexico in 2012 — to cost it around $6bn in restructuring costs and $1.2bn of costs related to disposals, the majority of which will fall this year and next. HSBC said on Tuesday it would reduce the size of its investment bank by reducing the amount of assets adjusted for risk by around 35 per cent in Europe and 45 per cent in the US. It added it would redeploy the capital tied up in these businesses in higher-growth areas.
HSBC’s planned restructuring include:
- European business: To reduce sales and trading, and equity research in Europe; transition structured products capabilities from the U.K. to Asia
- U.S. business: To reduce branch network by 30% and re-position as an “international client-focused corporate bank,” with targeted retail offering
- Global banking and markets: To shift more resources to Asia and the Middle East, while maintaining global investment banking hub in London
- Group level: To consolidate retail banking and wealth management, and global private banking into a new division called wealth and personal banking
In the US, where the bank has generated subpar returns for years, HSBC said it would “reposition” itself by slashing the size of its retail branch network by almost one-third, moving fixed-income trading to London, and reducing operating costs by 10 to 15 per cent. It said it would make significant changes to the structure of the group by merging the “back and middle office” sections of its investment bank and commercial bank, stopping short of a full-scale merger of the two divisions. It also unveiled plans to close its global private banking unit, which provides services to rich clients. The division will be merged with its retail banking unit.
The bank currently operates in more than 50 countries across North America, Europe, the Middle East and Asia. It employs more than 235,000 people around the world, with more than 40,000 based in the UK, BBC reports.
Bloomberg reports that HSBC is also targeting cost cuts by $4.5 billion as it faces challenges including Hong Kong protests and the coronavirus. HSBC, which earns the bulk of its profits in Asia, is still hunting for a permanent chief executive officer while interim boss Noel Quinn runs the lender and seeks to convince the undecided board he’s the right person at the top.
Market Watch reported that HSBC Holdings PLC’s 2019 net profit plunged 53% due to a substantial amount of goodwill impairment, the bank said Tuesday, as it plans to introduce a slew of measures to cut down costs and restructure the company.