Wed, Feb 19, 2020 page10

• HSBC seeks revamp by axing 35,000 jobs

  THREE-YEAR PLAN: No details were given about the cuts, which are three times bigger than expected, except that many would be in European and US investment bank units

  • AFP, LONDON
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  Asia-focused banking giant HSBC Holdings PLC yesterday axed 35,000 jobs, far more than expected, and posted slumping annual profits, as it warned over the financial impact of COVID-19.

  Pre-tax profits tumbled by a third to US$13.3 billion last year from a year earlier, largely owing to a US$7.3 billion write-off related to its investment and commercial banking businesses in Europe.

  The London-based lender added in a results statement that it hopes to cut its global workforce by 15 percent to 200,000 staff over the next three years.

  

  A man stands in front of a HSBC advertisement outside the bank’s headquarters in Hong Kong yesterday.

  Photo: AFP

  Commentators had expected 10,000 job cuts.

  The radical overhaul comes as HSBC streamlines operations in the US and Europe, although no details were given on where the axe would fall.

  HSBC has been trying to lower costs as it faces a multitude of uncertainties caused by the grinding US-China trade dispute, the UK’s departure from the EU and now COVID-19 in China.

  “The group’s 2019 performance was resilient. However, parts of our business are not delivering acceptable returns,” interim chief executive Noel Quinn said.

  “We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment and build a platform for sustainable growth,” he said.

  “We have already begun to implement this plan, which my management team and I are committed to executing at pace,” Quinn added.

  While its Asia business has done well in the past few years — fueled primarily by China — Europe and the US have disappointed.

  Quinn, who took over as acting CEO after the shock ousting in August last year of John Flint, has been tasked with transforming the sprawling international bank, which spans more than 50 countries, but makes the vast majority of its profit in Asia.

  Turning to COVID-19, HSBC said the outbreak in China had impacted its outlook.

  “We continue to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020,” the bank said.

  The restructuring plans are the biggest shake-up since 2012, when HSBC was caught up in a Mexican money-laundering scandal.

  The bank said it was targeting US$4.5 billion in cost cuts by 2022, with restructuring costs of about US$6 billion.

  Many of the cutbacks will be in the European and US investment banking sectors, while units in more profitable Asia and the Middle East would be bolstered.

  In the US, the bank said it planned to reduce its branch network by about 30 percent, consolidate back and middle-office activities, and lower operating expenses by 10 to 15 percent.

  For its non-UK Europe sector, the bank said it would “reduce our sales and trading and equity research in Europe and transition our structured products capabilities from the UK to Asia.”

  Riskier assets would be reduced by 35 percent in Europe and 45 percent in the US.

  Overall, the bank said it hoped to achieve a lower adjusted cost base of US$31 billion or below in 2022.

  The disappointing results sent HSBC’s shares sliding 5 percent in London and by 2.2 percent in Hong Kong, as it also reported a loss before tax of US$3.9 billion in the fourth quarter.

  The bright spot for HSBC remains Asia, which has accounted for half of its revenue and 90 percent of the group’s profit in the past few years.

  Adjusted profit before tax in Asia last year was up 6 percent to US$18.6 billion.

  Even in Hong Kong, which was battered by months of seething pro-democracy protests last year, the banking giant posted a 5 percent increase in adjusted pretax profit to US$12.1 billion.

  Yesterday’s statement gave little clarity on whether Quinn would get the CEO job full time, saying a permanent CEO would be appointed within six to 12 months.
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