HSBC to slash up to 50,000 jobs as part of overhaul

Europe’s largest bank set to make monumental reductions to its staff and business operations in order to boost stalling profit growth

Photo by: AFP
Photo by: AFP

Updated Jul 28, 2015

HSBC on Tuesday said that it will cut about 50,000 jobs and decrease its risk weighted assets by $290 billion in an attempt to improve the profitability of its stalling operations. 

According to the bank's announcement the majority of the employment cuts will be made to business sales departments in Brazil and Turkey. The remainder will be made to IT, back office operations and closing branches. In total, 7,000-8,000 job cuts are set to take place in the United Kingdom. 

Entering its second round of aggressive job cuts in four years the bank noted that by the end of 2014 HSBC had 258,000 full time equivalent employees but by 2017 full time staff will fall to 208,000. However, the corporation will re-hire staff its business and its compliance division, it announced. 

The bank will reduce its risk-weighted assets by $290 billion towards 2017. This will bring down the global banking and market division to less than a third of the group total. 

HSBC Chief Executive Stuart Gulliver, who started directing the company in 2011, will attempt once again to spike the bank's global operations and ease management, as previous attempts were weighed down by stalling growth, high compliance costs, fines and low interest rates.

Gulliver also stated that he will work towards achieving annual cost savings of up to $5 billion by 2017. It is expected to take up to three years in order to achieve its savings goal and will cost up to $4.5 billion.

“We recognise that the world has changed and we need to change with it,” said Gulliver. “I am confident that our actions will allow us to capture expected future growth opportunities and deliver further value to shareholders.”

After confirming exits from Turkey and Brazil, HSBC has announced that underperforming businesses in Mexico and United States will be next in line in order to advance returns. 

HSBC declared in March that it will establish its British retail and commercial banking business in Birmingham, England.

However, industry sources have stated that HSBC, whose other brands include First Direct and M&S Bank, could be re-branded. It may also sell its retail banking unit as a new rule states that such businesses must be separate from investment banking in order to protect customers.

The bank has established 11 criteria which it will use to asses the relocation of its headquarters from London to Asia. These include economic growth, the tax system and government support for the growth of the banking system.  

A review on the possible move will be complete by the end of the years, HSBC has said.

TRTWorld and agencies