Just months after ousting its former chief executive, HSBC plans to lay off approximately 10,000 members of staff on its latest cost-cutting scheme.
According to the Financial Times (FT), the cutbacks will mostly affect high-paid roles and will ultimately reduce their global workforce by 4 per cent. These plans come as Chief Executive Officer Noel Quinn strives to decrease costs across the business.
Struggles with falling interest rates, Brexit and global tariff wars have all mounted up to form issues that need to be addressed by saving money elsewhere.
The cut-backs will be the first major occurrence under HSBC´s latest chief executive, Noel Quinn, who took over from predecessor, John Flint, in August.
Flint is believed to have left HSBC amid tensions with its new chairman, Mark Tucker, after failing to take swift action on tough decisions. HSBC said its strategy had not changed and insisted Flint left by “mutual” agreement.
The bank reported 237,685 full-time employees at the end of June 2019, according to its 2019 interim report. However, 4,700 redundancies of mostly senior jobs were announced in early August. The latter came at another time of turbulence that was affected by US interest rate cuts, Britain´s departure from the European Union, the US-China trade war and unrest in Hong Kong.
Former HSBC Group CEO, Stuart Gulliver, announced plans to cut 30,000 jobs when he took the job in 2011 as part of a strategy to cut $3.5 billion in costs over three years and raise the bank’s return on equity to 12-15%.
Regarding the latest scheme of money-saving, the FT quoted an anonymous source as saying: “We’ve known for years that we need to do something about our cost base, the largest component of which is people – now we are finally grasping the nettle.”
Speculations state that the cuts could disproportionately affect HSBC´s European operations, where returns have fallen behind Asian counterparts. It was the only region to record a loss, totalling £520m, in the first half of the year.
“There’s some very hard modelling going on. We are asking why we have so many people in Europe when we’ve got double-digit returns in parts of Asia.” the source said.
It isn´t known for sure where these cut-backs will concentrate on, but analysts at Citi said: “HSBC has a structural profitability challenge in the Americas and Europe and headcount reduction may be appropriate.”
The employees´union, Unite said the news caught staff by surprise and is now demanding answers from HSBC management. “Unite is appalled by press reports of 10,000 job cuts globally and has raised urgent questions with the management of the bank in order to get vital answers on behalf of our members working within HSBC.”
HSBC has declined to comment on the FT report.