HSBC will slash as many as 50,000 jobs worldwide in an effort to streamline its businesses and improve its sluggish performance as it shifts its focus back to fast-growing Asian economies, Europe’s biggest bank said yesterday.
About half of the staff cuts will come from the sale of HSBC’s businesses in Brazil and Turkey, while the other half will come from cutting about 10 per cent of the remaining 233,000 staff by consolidating IT and back-office operations, and closing branches. About 7,000 to 8,000 of the workforce reduction are expected to be in Britain, where it is based.
When asked by TODAY, Mr Daniel Fitzpatrick, head of HSBC Singapore’s corporate communications, declined to comment on whether there would be any job cuts or gains in Singapore. The bank, which has been in Singapore since 1877, employs about 3,000 people here, its website shows.
The global workforce reduction exercise is part of a second attempt by HSBC chief executive Stuart Gulliver to boost profits since he took the helm at the start of 2011. The previous effort was foiled by high compliance costs, fines, low interest rates and weak growth.
The cuts will leave HSBC with about 208,000 staff by 2017, down from 258,000 at the end of last year, though the bank said it would be hiring in growth businesses and its compliance division.
HSBC also said it will cut its assets on a risk-adjusted basis by US$290 billion (S$392 billion) by 2017. That will include a reduction of US$140 billion in the Global Banking and Markets division, its investment bank, where returns have suffered in tough market conditions.
HSBC also lowered its target for return on equity to “greater than 10 per cent” by 2017, down from a previous target of 12 to 15 per cent by next year. Overall, HSBC aims to cut costs by between US$4.5 billion and US$5 billion by the end of 2017.
A key tenet of HSBC’s strategy unveiled yesterday is to expand its presence in China and across the Asia-Pacific region. HSBC has a sizeable presence across Asia deriving from its deep 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.
“Asia is expected to show high growth and become the centre of global trade over the next decade,’’ said Mr Gulliver.
HSBC’s plans to accelerate its investments in Asia will involve the expansion of its 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 expand in southern China’s Pearl River Delta manufacturing hub 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 is also planning a similar expansion exercise in South-east Asia, where booming economic growth in countries such as Indonesia is swelling the ranks of the middle classes.
The Asian pivot raises the likelihood that HSBC will shift its headquarters to Hong Kong.
HSBC has set out criteria it will use to evaluate whether to move its headquarters from London, where a bank levy cost the lender £700 million (S$1.45 billion) last year. These include factors such as economic growth, the tax system, government support for the growth of the banking system, long-term stability, and the possibility of attracting good staff.
The bank said it would complete the review of the possible move by the end of this year.