HSBC cutting up to 50,000 jobs globally
Massive restructuring at the bank aims to refocus on the fast-growing Asia-pacific region and NAFTA markets
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LONDON, U.K.—HSBC Holdings, Britain’s largest bank by market value, will cut between 22,000 and 25,000 jobs around the world in an attempt to reduce costs and shift its centre of gravity back toward fast-growing Asian economies.
In a June 9 statement, the bank said it is “undertaking a significant reshaping of its business portfolio” and “redeploying resources to capture expected future growth opportunities.”
A key tenet of the bank’s strategy is to expand its presence in China and across the Asia-Pacific region. As well as having a sizeable presence across Asia now, HSBC has historic ties to the region. It was founded in Hong Kong in 1865 when the city was a British colony in order to finance growing trade between China and Europe.
“The world is increasingly connected, with Asia expected to show high growth and become the centre of global trade over the next decade,” said Stuart Gulliver, HSBC’s chief executive.
There were no specific job cut announcements made regarding Canada, said Sharon Wilks, Head of Media Relations at HSBC Canada. “[Canada] remains a priority market for HSBC, sitting across several key trade corridors,” said Wilks.
HSBC also intends to sell its operations in Turkey and Brazil, which will see additional workforce reductions of around another 25,000. Although planning to dispose of its operation in Brazil, HSBC said it plans to maintain a presence in that country to serve large corporate clients in their international dealings.
Overall, HSBC aims to cut costs by between $4.5 billion and $5.0 billion by the end of 2017 and reduce the number of full-time employees by up to 25,000, equivalent to around 10 per cent of its global workforce.
A large chunk of those lost jobs will be in Britain, the bank’s headquarters, where up to 8,000 jobs could go. The bank hopes many of the job losses will come from attrition, by not filling posts that are vacated.
“We recognize that the world has changed and we need to change with it,” said Gulliver.
HSBC said a review on whether to move its headquarters out of London will be completed this year. The bank has already warned about the economic risks facing Britain if the country opts to leave the European Union in a referendum that the government has said will take place by the end of 2017. It’s also complained about the cost of Britain’s bank levy.
HSBC’s plans to accelerate its investments in Asia will involve the expansion of the asset management and insurance businesses in a bid to earn more profits from the region’s rapidly expanding class of newly wealthy.
In particular, the bank is planning to develop business in southern China’s Pearl River Delta manufacturing heartland in southern Guangdong province, which is next door to Hong Kong and one of the wealthiest regions in the world’s No. 2 economy. It’s also planning a similar expansion in Southeast Asia, where booming economic growth in countries like Indonesia is swelling the ranks of the middle classes.
Gary Greenwood, analyst at Shore Capital in London, said the investor update filled in some details on previously announced initiatives.
“The only piece of material new information appears to be the announcement that the company aims to reduce its risk weighted asset base by one quarter or $290 billion,” Greenwood said.
“We question whether management will be able to achieve this and deliver on its commitment to grow revenue,” he added
Investors appeared fairly lukewarm to HSBC’s strategic outlines, and the company’s share price was down 0.3 per cent at 618 pence in early trading in London.
Kelvin Chan in Hong Kong and Michael Ouellette, editor of CanadianManufacturing.com, contributed to this report.