HSBC slashes jobs as it shifts fo­cus fur­ther to Asian roots

The China Post - - FRONT PAGE - BY PAN PYLAS

HSBC Hold­ings, Europe’s largest bank by mar­ket value, will cut up to 25,000 jobs glob­ally to re­duce costs and shift its cen­ter of grav­ity fur­ther to­ward the fast­grow­ing Asian economies where it started op­er­a­tions 150 years ago.

The bank, which is based in Lon­don and has a value of around 120 bil­lion pounds (US$184 bil­lion), said Tues­day it is “un­der­tak­ing a sig­nif­i­cant re­shap­ing of its busi­ness port­fo­lio” and “re­de­ploy­ing re­sources to cap­ture ex­pected fu­ture growth op­por­tu­ni­ties.”

Though it has not yet de­cided whether to move its head­quar­ters, the bank’s state­ment shows clearly where it thinks its com­mer­cial fu­ture lies — China and the Asia-Pa­cific re­gion.

Ma­jor Pres­ence across Asia

HSBC al­ready has a ma­jor pres­ence across Asia. Around 75 per­cent of its 2014 prof­its were gen­er­ated in the re­gion, even though it only has about a third of its staff there and its as­sets are dwarfed by those it con­trols in Europe.

HSBC has 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, much of it in­volv­ing opium. Its orig­i­nal name, later short­ened to HSBC, says it all: The Hongkong and Shang­hai Bank­ing Cor­po­ra­tion.

“The world is in­creas­ingly con­nected, with Asia ex­pected to show high growth and be­come the cen­ter of global trade over the next decade,” said Stu­art Gul­liver, HSBC’s chief ex­ec­u­tive. “We rec­og­nize that the world has changed and we need to change with it.”

HSBC, which has op­er­a­tions in more than 70 coun­tries and around 51 mil­lion cus­tomers, said it in­tends to sell its op­er­a­tions in Turkey and Brazil, a move that will see its work­force re­duce by around an­other 25,000. Although plan­ning to dis­pose of its op­er­a­tion in Brazil, HSBC said it plans to main­tain a pres­ence in that coun­try to serve large cor­po­rate clients in their in­ter­na­tional deal­ings.

Over­all, HSBC aims to cut costs by US$4.5 bil­lion to US$5.0 bil­lion by the end of 2017 and re­duce the num­ber of full-time em­ploy­ees by around 10 per­cent, equiv­a­lent to

be­tween 22,000 and 25,000.

United King­dom

About 8,000 of those lost jobs will be in the UK. The bank hopes many will come from at­tri­tion, by not fill­ing posts that are va­cated.

A top union of­fi­cial in the UK said the ex­pected job cuts rep­re­sented the lat­est ex­am­ple of a work­force be­ing pun­ished for the mis­con­duct of oth­ers, no­tably those in se­nior man­age­ment and in­vest­ment bank­ing. HSBC has paid bil­lions in fines glob­ally to set­tle in­ves­ti­ga­tions of mar­ket rig­ging and al­le­ga­tions it helped clients evade taxes and laun­der money.

“Af­ter all the scan­dals of re­cent years, front-line staff have suf­fered time and time again as they are forced to pay for the mis­takes of oth­ers with their jobs, their terms and con­di­tions and their rep­u­ta­tion,” said Do­minic Hook of Unite union.

A fur­ther con­cern for Bri­tish staff is the pos­si­bil­ity that the bank will move its head­quar­ters out of Lon­don. The bank said it will make the de­ci­sion this year.

The bank has al­ready warned about the eco­nomic risks fac­ing the UK if the coun­try opts to leave the Euro­pean Union in a ref­er­en­dum that the gov­ern­ment has said will take place by the end of 2017. It’s also com­plained about the cost of a levy that the UK gov­ern­ment puts on banks — HSBC is set to pay around US$1.5 bil­lion this year alone on that.

HSBC’s an­nounce­ment comes a day ahead of a ma­jor speech from Bri­tish econ­omy min­is­ter, Ge­orge Os­borne, who many think is con- sider­ing levy.

“We think the fi­nan­cial logic for HSBC to es­cape the clutches of the UK — and Europe — is over­whelm­ing,” said Ian Gor­don, an an­a­lyst at In­vestec. “What pos­si­ble rea­son is there to stay?”

HSBC’s plans to ac­cel­er­ate its in­vest­ments in Asia will in­volve the ex­pan­sion of the 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 de­velop busi­ness in south­ern China’s Pearl River Delta man­u­fac­tur­ing heart­land in Guang­dong prov­ince, which is next door to Hong Kong and one of the wealth­i­est re­gions in the world’s No. 2 econ­omy. It’s also plan­ning a sim­i­lar ex­pan­sion in Southeast Asia, where boom­ing eco­nomic growth in coun­tries like In­done­sia is swelling the ranks of the mid­dle classes.

HSBC added that it wanted to re­turn to prof­itabil­ity the global bank­ing and mar­kets di­vi­sion, a branch that has been hit by tougher reg­u­la­tions since the fi­nan­cial cri­sis. In 2014, HSBC saw its post­tax profit fall to US$14.7 bil­lion from US$17.8 bil­lion the year be­fore, largely be­cause of a se­ries of fines, set­tle­ments and cus­tomer com­pen­sa­tions in Bri­tain.

In­vestors ap­peared luke­warm to HSBC’s strate­gic plan as much of it had been an­tic­i­pated. The com­pany’s share price was down 1.1 per­cent at 613 pence in late morn­ing trad­ing in Lon­don.

pulling back the bank

CNA

In this photo pro­vided by CNA yes­ter­day, In­done­sian boy Ak­mal, 12, re­cently ex­pelled egg-like struc­tures from his body, ac­cord­ing to lo­cal news­pa­per Kom­pas. Ak­mal, who lives in South Su­lawesi, re­ported feel­ing odd ob­jects in the stom­ach, and ex­creted seven egg-like things. Ac­cord­ing to hos­pi­tal X-rays, egg-like struc­tures were clearly vis­i­ble in the pelvis area.

AP

A taxi is re­flected as it drives past an HSBC plaque in St James’s Street, Lon­don on Tues­day, June 9.

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