35,000 sackings loom as HSBC slashes costs

Top News | Agencies and Kevin Xu 19 Feb 2020

HSBC is set to ax around 35,000 jobs over the next three years after posting weaker-than-expected results, though the impact on the headcount for Asia will be limited.

The London-based lender is planning cost reductions of US$4.5 billion (HK$35.1 billion) for underperforming units in the United States and Europe.

In the meantime, HSBC will accelerate investments in Asia, where the bank draws the bulk of its profit, though it is grappling with risks from protests in Hong Kong and the Covid-19 outbreak.

"Parts of our business are not delivering acceptable returns," interim chief executive Noel Quinn said in the bank's full-year earnings statement.

Quinn, who is also exiting several business lines, added that staff numbers could drop by 15 percent within the next three years.

"We are looking at an endgame of closer to 200,000," he said in an interview with Bloomberg.

"While some roles will be lost as we accelerate automation, and reflect the new group structure, the net impact on headcount in Asia will be low as we continue to invest for growth," said Peter Wong Tung-shun, deputy chairman and chief executive of HSBC.

"Asia is central to the group and will in future form a larger proportion of the group's capital resources."

The cutbacks will extend into parts of HSBC's European and US investment banking businesses. In the United States, assets linked to its trading operations will be nearly halved under the new plan.

HSBC is also scaling bank its retail network by 30 percent.

The board is deciding whether the sweeping overhaul announced by Quinn is enough to secure him the top job permanently.

Speculation had mounted months ago that Quinn would likely become CEO on a permanent basis but this continues to fade.

Inside sources said earlier this month that HSBC is seriously considering external candidates.

At the same time, HSBC appointed Barry O'Byrne as chief executive of global commercial banking and Charlie Nunn as chief executive of the newly created wealth and personal banking unit.

Antonio Simoes has decided to step down as chief of global private banking and will leaving HSBC this year.

Europe's biggest bank by assets said profit before tax tumbled by a third to US$13.35 billion in 2019, far below the average estimate of US$20.03 billion from brokerages compiled by the bank.

kevin.xu@singtaonewscorp.com

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