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HSBC Holdings to freeze salaries at HK branches

"You can't give any guarantee in this kind of environment."

Gareth Hewett, spokesman for HSBC Holdings

HSBC Holdings Plc, Europe's largest bank by market value, will freeze pay for its 13,800 Hong Kong workers for a fourth year in five to curb costs.

The bank, which controls two of the city's biggest lenders, doesn't rule out job cuts, said spokesman Gareth Hewett.

The decision ``reflected the economic condition'' in Hong Kong and it is not a global move, said Hewett. "You can't give any guarantee in this kind of environment."

Hong Kong banks are closing branches or firing staff to cut costs after loan growth stalled and increased provisions for non-performing loans crimped profits. First-half net income at HSBC units, Hongkong & Shanghai Banking Corp and Hang Seng Bank Ltd, fell because of bad-loan provisions.

The city's personal bankruptcies tripled to a record in October amid a sluggish economy.

Lenders' combined pretax profit was unchanged in the first nine months from a year earlier and credit-card issuers wrote off 15 percent of loans in the third quarter, up from 14 percent in the previous three months, the Hong Kong Monetary Authority said yesterday.

HSBC, which froze salaries in 1999 and 2000 in the wake of the 1997-1998 Asian financial crisis, kept Hong Kong employees' wages unchanged this year and gave an average 2 percent raise last year. The bank will decide whether it will pay bonuses in March, when earnings are published, Hewett said.

To reduce costs, Hang Seng Bank in October said it plans to move about 30 jobs at its call center to southern China as soon as the end of the year. HSBC, which already employs as many as 600 people in its Shanghai call-center, plans to move more people there in the future to reduce costs and increase its presence on the mainland, Dicky Yip, chief executive of the bank's China business, said last month.

The pay freeze at HSBC was earlier reported by the Hong Kong Economic Times.

Hang Seng Bank may follow its parent to curb workers' pay, the paper said, without citing anyone.

Cecilia Ko, spokeswoman at Hang Seng Bank, said a decision will be made by year-end. The bank employs 7,300 people.
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