HSBC resumes plan to cut 35,000 jobs worldwide
HSBC has restarted its plans to cut 35,000 jobs around the world, after pausing the redundancies as the coronavirus pandemic worsened.
The UK-listed bank had initially announced the plan to cut about 15% of its 235,000-strong workforce in February but put the process on hold in March because it did not want to leave workers unable to find new work during the various lockdowns.
The bank’s interim chief executive, Noel Quinn, wants to cut costs by £3.5bn, with the aim of increasing profitability as the lender chases opportunities in Asia. Almost half of HSBC’s 2019 revenues came from Asia, compared to only 29% in Europe.
Quinn had previously said there would be “meaningful” cuts in the UK. The main focus is expected to be head office operations as well as its global bank and markets business, which are largely London based.
HSBC has not said what the impact will be on its UK branch network. In February it said the closure of 27 branches this year was not related to the restructuring plan but was a reflection of their declining use by customers.
Quinn wrote to staff on Tuesday warning of “challenging times ahead” and said the job cuts were “even more necessary” because of the impact of the pandemic on the bank’s profits, which halved in the first quarter.
Profitability for 2020 was expected to be “materially lower” than 2019 despite the cost cutting, the bank said in April. Loan losses could reach $11bn (£8.8bn) this year, it said. Expected credit losses ballooned by $2.4bn in the first three months of 2020 as the pandemic hit Asia and then Europe.
HSBC has cancelled its dividend for the year after the Bank of England pressured the British banking sector to preserve cash to see it through the crisis and an expected deep recession. However, the Bank of England has expressed confidence that lenders have enough capital to continue lending to businesses and consumers.
“I wish I could say that the next few months will see a return to normality but that is unlikely to be the case,” Quinn wrote in a memo sent to all staff. “We could not pause the job losses indefinitely – it was always a question of ‘not if but when’.”
The majority of staff would be employed or paid for most of 2020, but executives would look to make the cuts during the second half of the year, Quinn wrote. The bank would extend a freeze on external recruitment in the hope that it could find new roles for some of the workers whose jobs would be made redundant, he added.
Unite, one of the unions representing workers in the bank’s UK branches, said it would oppose all compulsory redundancies.
Dominic Hook, Unite’s national officer, said: “The question that must be asked today is ‘why now, HSBC?’ At present, vast numbers of HSBC staff are making massive sacrifices working from home or taking risks travelling into offices and bank branches to help customers. Why now?”
HSBC has also faced criticism this month after it and rival Standard Chartered both publicly endorsed China’s imposition of a new security law in Hong Kong. Both banks are Londonlisted but focused on Asia. The US secretary of state, Mike Pompeo, accused the company of a “corporate kowtow”.
The backing for the law also prompted anger from the Labour party and prominent investors. Shadow foreign secretary Lisa Nandy and shadow chancellor Anneliese Dodds said they had profound concerns that HSBC’s move could undermine the rights of citizens of Hong Kong, the territory in which the bank was founded. Aviva Investors, a large UK shareholder, also expressed unease.
HSBC and other UK banks also face the prospect of the UK’s trading relationship with the EU defaulting to World Trade Organization terms at the end of 2020. The bank said this was a “prolonged period of uncertainty, unstable economic conditions and market volatility”.