On Tuesday 18th February British bank HSBC announced plans to cut nearly 15% of its global workforce i.e. around some 35,000 jobs and shed USD 100 billion in investments as it refocuses on growth markets in Asia.
Meanwhile, the CEO of HSBC group Noel Quinn said that HSBC – the world’s seventh-largest bank- had a phenomenal performance in year 2019 but that’s just parts of the business. He further added that the investment markets in Europe and the U.S. and Global Banking are not being able to deliver the acceptable returns. Quinn said in a statement that in order to address the underperforming parts of the business the HSBC group will be taking some decisive action on 18th February 2020. This is being done for the redistribution of the capital to the growth opportunity and for the simplification of the business by doing so HSBC is trying to reduce its cost base. He further added that the main purpose behind this move is to grow.
According to the Press reports, though HSBC is a London based group but it most of its business is done in Asia. The has been dealing with many recent developments in political and environmental factors that include protests in U.S.-China trade disputes, Hong Kong, Brexit and now the latest coronavirus. The bank, which currently has 235,000 employees worldwide, says it is simplifying operations for “greater pace, greater agility and a less bureaucratic environment.” Job reductions are expected to take place over three years through a mix of layoffs and attrition.
HSBC has about 10,000 employees in the U.S. and operates branches in California, Connecticut, the District of Columbia, Florida, Maryland, New Jersey, New York, Pennsylvania, Virginia and Washington State. Robert Sherman, an HSBC spokesperson for U.S. operations, said in a statement emailed to National public radio that the bank is not sharing specific information on which jobs will be affected until those employees are notified. However, Sherman said the bank will close about 80 branches this year in the U.S. alone, a reduction of about 30%. But he added that it will continue to open new branches on the West Coast to better serve the large Asian communities there. HSBC’s troubles reflect trends in the wider banking industry, which is under pressure from low interest rates around the world, the AP noted. Banks tend to make less money when rates are low, as its squeezes their lending business.
The bank’s net profit fell 53%, to nearly USD 6 billion, last year, according to its annual report. HSBC also delivered an 8% return but hopes to reach returns of 10% to 12% in the next few years.
On news of the restructuring, HSBC stock fell more than 6% on the London Stock Exchange.