Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

HSBC to resume massive restructuring plan, cut 35,000 jobs

HSBC to resume massive restructuring plan, cut 35,000 jobs

HSBC plans to cut as many as 35,000 jobs as part of a massive overhaul first unveiled in February. The London-based lender paused jobs cuts in March because of the ‘extraordinary impact’ of the coronavirus pandemic on the global economy
HSBC plans to resume thousands of job cuts planned as part of chief executive Noel Quinn’s strategy to further pivot to Asia, but paused in March as the coronavirus pandemic pushed the global economy towards a recession.

Quinn said in an internal memorandum on Wednesday

that the measures, originally announced in February as part of an effort to reduce annual costs by US$4.5 billion, “are even more necessary today”, adding that “virtually all economic forecasts point to challenging times ahead”.

Quinn said Hong Kong’s biggest lender still intends to proceed with efforts to cut its headcount from about 235,000 people currently to close to 200,000 in the “medium term”. The bank had previously said the cost cuts would be fully implemented by 2022.

“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,” he said in a memo seen by the South China Morning Post.

A HSBC spokeswoman confirmed the contents of the memo on Wednesday.

The job cuts were paused in March as the coronavirus pandemic forced cities from New York to London to Singapore into lockdown and began to weigh heavily on economic activity. “The decisions we are announcing today enable us to better support our people during the present uncertainty, while remaining focused on our ambition to transform the bank,” Quinn said at the time, in a memo on March 26.

The National Bureau of Economic Research said last week that the United States’ economy fell into a recession in February, ending the longest economic expansion in the nation’s history. The International Monetary Fund said on Tuesday the “Great Lockdown” is expected to push both advanced and emerging market economies into recession this year, the first time that this has happened since the Great Depression.

Like many of its banking rivals, HSBC placed the “vast majority” of its planned job cuts on hold as the downturn worsened this year, but had been expected to resume those as soon as the economic picture cleared up.

Non-essential retail shops reopened in the United Kingdom on Monday, as a months-long lockdown began to ease in the country. The UK is HSBC’s second-biggest market behind Hong Kong, which has also further eased social distancing rules this week.

As part of a revamped strategy announced in February, HSBC, which is based in London, but generates most of its profit in Asia, is making a bigger bet on rising incomes over time in mainland China and Asia, particularly the development of the Greater Bay Area.

Quinn has said the bank, one of three lenders authorised to issue currency in Hong Kong, would shift capital from underperforming businesses in Europe and the US to growth markets, such as Hong Kong and other parts of Asia. The bank previously said it planned to shrink its investment bank in Europe and the US, and cut its American retail branch network by 30 per cent as part of the reshaping of its businesses. The bank has not broken down the reduction in headcount by individual regions.

In May, HSBC agreed to take full control of its Chinese life insurance joint venture as it took advantage of new rules that have further opened up China’s financial services industry.

“Since February, we have pressed forward with some aspects of our transformation programme, but we now need to look to the long term and move ahead with others, including reducing our costs,” Quinn said. He said the bank’s executive committee would look at what actions it must take in the second half of the year “to ensure we are well positioned for 2021 and beyond”.

Since announcing the pause, HSBC has faced a much more challenging economic environment as businesses across the globe laid off workers and closed operations, while central banks pushed interest rates to historic lows to stimulate global growth.

Federal Reserve Chairman Jerome Powell, for example, said last week that the US central bank was not planning to raise interest rates any time soon and some Fed officials indicated rates could remain near zero through 2022.

In the first quarter, HSBC raised its provision for bad loans to their highest level in nine years and warned its profit would be lower for the year. The bank warned its provisions for credit losses could be between US$7 billion and US$11 billion for the full year, with most of those provisions expected in the first half of 2020.

“When making decisions about redundancies, we will proceed thoughtfully and consider local circumstances,” Quinn said. “We will aim to redeploy colleagues where we can. To support this commitment, the freeze on the vast majority of external recruitment will remain in place, and we will make every effort to fill vacancies internally.”

The bank has also found itself in the middle of a row between Washington and Beijing over a new national security law for Hong Kong after Peter Wong, its Asia-Pacific chief executive, signed a petition in support of the legislation and the bank put out a carefully worded statement this month.

“As a member of the Hong Kong Association of Banks (HKAB), consistent with the statement issued on May 26 by HKAB, we reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country, two systems’,” HSBC said in a post on one of its social media channels in the mainland on June 3. “We are fully committed to playing our part in supporting Hong Kong now and in the future.”

Major businesses that rely on Hong Kong, including Jardine Matheson Group, the owner of the Mandarin Oriental hotel chain, Swire Pacific, the parent company of the city’s de facto airline Cathay Pacific, and banking rival Standard Chartered have also expressed public support for the law, along with the city’s property developers.

Quinn said the bank does not have a single unified timetable for the job cuts, as different countries have different laws regarding redundancies. He said everyone who loses their job this year will “remain either employed or paid for much of the rest of this year”.

“We could not pause the job losses indefinitely – it was always a question of ‘not if, but when’,” he said. “It is now right in my view that we restart this part of our transformation and manage it well.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Japanese Customer Sways from VW to BYD after “Unbelievable” Test Drive amid Dealership Expansion
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Pickles are the latest craze among Generation Z in the United States.
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
White House Eyes Budapest for Peace Talks
Cave Diving Beneath the Streets of Budapest
Another American Restaurant Chain Opens in Budapest
Hungarian Opposition Politician Supports Ukrainian Commander
Opposition Leader Threatens Media Outlets
American Airlines Adds New Flights to Budapest
F1 Hungarian Grand Prix Wraps Up
WhatsApp is rolling out a feature that looks a lot like Telegram.
U.S. Trade Representative says Washington still negotiating trade deals after court rules tariffs illegal
Von der Leyen says Europe drawing up 'precise' plans to send troops to Ukraine
Kremlin accuses Europe of hindering Trump’s peace efforts in Ukraine
×