HSBC cuts headcount by 35,000 in deep overhaul
EUROPE’S BIGGEST BANK PROFITS DROP BY 33% AFTER $7.3B COST IMPAIRMENT
Europe’s biggest bank gets hit by 33% drop in profit
Europe’s biggest bank, HSBC, will shed some 35,000 jobs — 15% of the total — as part of an overhaul to focus on faster-growing markets in Asia and as it tries to cope with a slew of global uncertainties, from Brexit to the trade wars to the new coronavirus.
The interim chief executive, Noel Quinn, said yesterday the number of people employed by the bank would fall from 235,000 to 200,000 in the next three years. Some of the reductions would come from attrition as opposed to outright cuts.
HSBC Holdings posted a fall of 33 per cent in annual profit, lagging analyst estimates, mainly due to a goodwill impairment of $7.3 billion (Dh26.79 billion) related to its investment banking and commercial banking businesses in Europe.
The bank, which makes the bulk of its revenue in Asia, reported profit before tax of $13.35 billion for 2019 versus $19.89 billion a year earlier. The result, which is being announced along with a strategy update by interim Chief Executive Noel Quinn, compared with the $20.03 billion average of brokerage estimates compiled by the bank.
HSBC is in over 50 countries across Europe, North America, the Middle East and Asia — with the latter accounting for roughly half of its revenue and 90 per cent of profit.
Taking a cost hit
HSBC Holdings is taking about $7.3 billion of charges and exiting several business units in its most ambitious restructuring plan since the global financial crisis of 2008, according to Bloomberg.
“Parts of our business are not delivering acceptable returns,” Quinn said in a statement as part of its full-year earnings. “We are therefore outlining a revised plan to increase returns for investors.”
Cutbacks will extend into parts of its European and US investment banking businesses. In the US, assets linked to its trading operations will be nearly halved under the new plan. But the lender will bolster
its investment banking units in Asia and the Middle East.
A refreshed strategy is a key plank to Chairman Mark Tucker’s plans to transform HSBC as questions have mounted over its relatively poor returns given its exposure to many of the world’s fastest-growing economies, in particular China where it has focused its investment.
The company also suspended its share buyback program for 2020 and 2021.