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  • HSBC To Cut Jobs Globally To Focus On Asia

    HSBC To Cut Jobs Globally To Focus On Asia

    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.

     

    Source: www.todayonline.com

  • More Non-Residents Retrenched Amid Restructuring

    More Non-Residents Retrenched Amid Restructuring

    Amid ongoing business restructuring, last year saw a 40 per cent jump in the number of non-resident workers retrenched, figures from the Ministry of Manpower show.

    A total of 12,930 workers received the pink slip in 2014, 12 per cent higher than in the year before. This represented 6.3 lay-offs per 1,000 employees, up from 5.8 in 2013.

    Last year’s higher redundancy numbers were caused by more non-resident workers being let go — 5,690 versus 4,050 in 2013. In comparison, the number of residents made redundant fell from 7,520 to 7,240.

    These led to resident workers making up 56 per cent of retrenchments, the lowest since 1998 and the first dip in three years. In 2013, the proportion of resident redundancies was 65 per cent.

    Resident workers laid off also found new jobs more quickly, with half of them finding new bosses within one month. The percentage of residents who re-entered the workforce within six months of redundancy also rose for the third straight quarter to 59 per cent in December last year.

    The services sector — mainly wholesale trade, financial services, legal, accounting and management services, and retail trade — accounted for most of the retrenchments (56 per cent). Manufacturing as a whole made up 31 per cent of the lay-offs, while construction was responsible for the remaining 13 per cent. The increase in construction lay-offs was caused by a decline in private sector construction output.

    Despite forming the majority of those retrenched, PMETs comprised a smaller share of the lay-offs last year (51 per cent) compared to 2013 (56 per cent).

    The top reason cited for lay-offs was “restructuring of business processes for greater efficiency” (32 per cent), followed by “reorganisation of businesses” (24 per cent) and “poor business or business failure not due to recession” (22 per cent).

    Commenting on the statistics, analysts said the higher number of retrenchments was caused by a combination of modest economic growth last year, tightened foreign labour supply and economic restructuring.

    The higher Dependency Ratio Ceiling — the maximum ratio of foreign employees permitted — in the services and construction sectors led to increased redundancies, said DBS economist Irvin Seah. “The services sector finds it difficult to find more local workers to support that additional one foreign worker. As a result, companies have to downsize operations, trim their headcount and increase productivity,” he said.

    Higher foreign-worker levies could have caused a shift in preference towards retaining resident workers, said UOB economist Francis Tan.

    OCBC economist Selena Ling said the higher redundancies are “not too alarming for now”. “As restructuring continues, and as companies and industries try to adapt to the new normal — improving productivity and making do with less manpower — you could still get a fair bit of churn,” she said.

    Noting the low unemployment rate and high re-entry rate for resident workers, she added: “If overall unemployment rate is still fairly low, then a certain amount of churn is not a bad thing because it means there is labour mobility, which is what you need for a fairly efficient, market driven economy.”

    Experts said they foresee redundancies rising further in the near-term. The services and construction sectors will continue to be vulnerable this year due to weak productivity, which could affect firms’ overall business performance, said Mr Tan. “If a company in a particular sector is not seeing growth, then naturally they may shut down. Then, there will be increased redundancies,” he added.

     

    Source: www.todayonline.com