Scandal-hit bank HSBC Holdings PLC said yesterday that it would cut its global headcount by up to 50,000 as part of a restructuring that entails its withdrawal from Brazil and Turkey, while it also mulls abandoning London as its headquarters.
In a statement to the Hong Kong stock exchange, it also said it intends to save US$5 billion in annual costs within two years.
“HSBC is now undertaking a significant reshaping of its business portfolio,” the bank said. “It is redeploying resources to capture expected future growth opportunities and adapting to structural changes in the operating climate.”
The statement did not mention extensive job cuts, the details of which were buried in an investors’ update report.
The report said there would be a 10 percent reduction in jobs, with between 22,000 and 25,000 classified under “transformation savings,” including streamlining information technology projects. A further 25,000 jobs would be lost with the selling of operations in Turkey and Brazil.
The move is the latest in a series of swingeing cuts under chief executive Stuart Gulliver, who joined HSBC at the beginning of 2011. Staff numbers have dropped from 295,000 in 2010 and by 2017 there is to be 208,000 remaining.
The statement also said it will aim to save US$4.5 billion to US$5 billion in annual costs by 2017, but would continue to serve large corporate clients in Brazil “with respect to their international needs.”
The bank added that it would focus more on Asia, particularly in the Pearl River Delta, and set up a ring-fenced British bank.
HSBC, founded 150 years ago in Hong Kong, also expects to complete a review of where to locate its headquarters by the end of this year.
Gulliver has said the lender might relocate due to increased British regulation and taxation of the banking sector.
Financial analyst Jackson Wong (黃志陽) described yesterday’s announcement as a “decisive move.”
“It’s a big cut ... [but] they haven’t been able to save costs over the past few years,” Wong, associate director for Simsen International Financial Group (天行國際金融集團), told reporters.
He added that the bank was likely to relocate its headquarters to Hong Kong, owing to the city’s low tax regime.
“The chance is pretty high for Hong Kong,” he said.
However, analyst Francis Lun (藺常念) said the cuts might be too severe.
“They may have overdone it,” Lun said.
“If you cut the jobs any further ... you cannot get the job done,” he added.
Lun said that Asia would be a friendlier environment for the bank.
“The problem is really with the regulators in Europe and America because they lost big during the financial tsunami, so they want to get even with the banks,” Lun said. “There’s no future for major international banks in Europe and America, no matter how much money you make or save.”
Lun said that the Hong Kong Monetary Authority (HKMA), the city’s de facto bank, was more relaxed.
“They are not out to get the pound of flesh,” he said.
Swiss prosecutors on Thursday last week closed an investigation into allegations that HSBC’s Geneva branch helped clients evade millions of dollars in taxes, after the bank agreed to pay tens of millions in compensation.
The bank agreed to pay 40 million Swiss francs (US$43 million).
Last year, HSBC was separately fined by US and British regulators for attempting to rig foreign-exchange markets.
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