- HSBC has a global workforce of 235,000
- Job cuts are part of a broader restructuring program to cut annual costs by $4.5 billion by 2022
- In the first quarter, HSBC set aside some $3 billion in bad loan provisions
HSBC (HSBC), the largest bank in the U.K., said it will carry on with a plan to cut 35,000 jobs. The restructuring was originally announced in February but was postponed due to the emergence of the coronavirus pandemic.
The London-based lender has a global workforce of 235,000. At its peak, HSBC once boasted some 300,000 employees.
HSBC will also freeze almost all external hiring and seek to fill available vacancies internally.
“We could not pause the job losses indefinitely – it was always a question of ‘not if, but when’,” said Chief Executive Noel Quinn.
“I know that this will not be welcome news and that it will create understandable concern and uncertainty, but I want to be open with you about the reality of the current situation,” Quinn added in an internal memo.
Quinn said the job cuts were necessary now in light of falling profits and challenging economic forecasts. The chief executive has also ordered senior executives to identify more ways to cut costs in the second half of 2020.
The majority of the cuts will likely take place in the back offices at Global Banking and Markets, which includes HSBC’s investment banking and trading segments.
The latest job cuts are part of a broader restructuring program designed to cut annual costs by $4.5 billion by 2022 and to focus operations more on the profitable East Asian market.
In the first quarter, HSBC set aside some $3 billion in bad loan provisions. The bank warned that provisions for credit losses could reach $11 billion for the full year.
Analysts expect other banks to make similar cuts.
“Despite banks’ commitments to retain staff through the pandemic crisis, we believe it is only a matter of time before substantial further cost-trimming plans are announced,” wrote John Cronin, an analyst at broker Goodbody in Dublin.
The Unite union, which represents HSBC staff in the U.K., questioned the timing of the job cuts.
“The scale of the restructuring program by HSBC is the cause of great apprehension amongst the workforce,” said Dominic Hook, Unite’s national officer. “The news that some 35,000 colleagues are once more at risk of losing their livelihoods is extremely concerning to Unite the union. 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?”
Hook noted that in the U.K., HSBC is a “profitable and successful organization, in no small part because of its dedicated and highly skilled workforce. The bank must stand by its team now more than ever and recognize their ongoing efforts in making the organization effective in delivering incredible service to its customers.”
As such, Unite said it will “continue to oppose any compulsory job losses within HSBC and work vigorously to ensure staff are heard and their jobs protected.”
Separately, HSBC has been widely criticized for supporting China’s controversial security law in Hong Kong – a measure some fear will erase the island’s autonomy from Beijing.
U.S. Secretary of State Mike Pompeo suggested earlier this month that China’s Communist Party was “browbeating” HSBC into submission.
Aviva Investors, a major shareholder in both HSBC and Standard Chartered, said it was “uneasy” over the banks’ endorsement of the Hong Kong security law.
“If companies make political statements, they must accept the corporate responsibilities that follow,” said Aviva Investors Chief Investment Officer for Equities, David Cumming. “Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to this law.”