HSBC to cut 35,000 jobs worldwide as profits plunge

Bank warns of ‘meaningful’ job losses in the UK and of impact of coronavirus outbreak in Asia

HSBC has said it will slash 35,000 jobs over three years as part of a major shake-up as it issued a warning over the impact of the coronavirus outbreak in Asia.

The interim chief executive, Noel Quinn, confirmed on Tuesday that plans to cut $4.5bn worth of costs would involve slashing about 15% of the Group’s global workforce. “We would expect our headcount to decrease from the current level of 235,000 to be closer to 200,000 in 2022,” Quinn said.

“This represents one of the deepest restructuring and simplification programmes in our history.”

HSBC, which operates in 64 countries, said there would be “meaningful job cuts here in the UK”, mainly affecting its head office operations and global banks and markets business, which are largely London-based. The lender would not comment on potential branch closures in the UK but said it was keeping the network “under review”. The Group employs about 40,000 staff in the UK.

Despite the planned job cuts, HSBC said it had set aside £3.3bn in bonuses, down nearly 4% compared to last year. Quinn, who took over as interim chief executive after the ousting of John Flint in August last year, was paid nearly £2m including a £665,000 bonus. The bank’s Group chief Financial officer, Ewen Stevenson, who joined in January 2019, was handed a £1m bonus as part of his £4.9m pay package.

Union officials called for urgent talks with HSBC on the planned cutbacks.

Unite’s national officer for finance, Dominic Hook, said: “Despite HSBC still making billions of dollars of profit, once again hardworking and dedicated staff have woken up to the news that their job could be at risk.

“Unite is seeking urgent discussions with senior management to understand the serious impact of this announcement and what it will mean for our members in the UK.”

The UK cutbacks are part of a wider restructuring across the bank’s European operations, where it aims to cut costs by 25%. HSBC is also targeting its US division, which will involve closing a third of its 224 branches, and said technology and automation would mean job losses across the bank as a whole. Apart from the cost-cutting, it also plans to shed $100bn worth of assets by the end of 2022.

The bank also issued a warning over the coronavirus outbreak in Asia, which makes up the bulk of its profits, saying it could have an impact on its performance in 2020.

HSBC said there had already been significant disruption for staff, suppliers and customers, particularly in mainland China and Hong Kong, and it was monitoring the situation closely.

But if the outbreak continues to spread throughout the second half of the year, HSBC could be forced to set aside as much as $600m to deal with the business fallout. Stevenson said: “We don’t expect anything like that but we do expect some increase in provisioning this year.”

Provisions for coronavirus would help cover bad debts if customers start to default on their loans. Individual borrowers could fall ill, while corporate customers could face financial difficulty if supply chains are disrupted due to trade restrictions or factory closures, particularly in China.

Stevenson said: “We expect to take additional loan loss provisions as a result of the coronavirus and the weakened outlook for the Hong Kong economy. I think it’s really a call on how long does it take to contain the virus and certainly some of the latest data has given us more optimism on that over the last week or so.”

He said the bank would have further details on the impact of the virus on its full-year results when it releases first-quarter earnings on 28 April. HSBC’s profits before tax for 2019 dropped 33% to $13.3bn, substantially below analysts’ forecasts.

The coronavirus outbreak is the latest challenge HSBC has had to face in Asia. It was also affected by anti-government protests in Hong Kong and tensions over the USChina trade war last year. However, Quinn said the lender remains committed to China, which represents a significant opportunity for growth despite recent disruptions.

“Absolutely, we need to deal with the coronavirus situation in the short-term but we do not see that changing the long-term strategic attractiveness of China,” he said.

HSBC’s shares fell 6.2% in afternoon trading to 553p.