HSBC to slash 50k jobs, reducing global reach
HSBC pledged a new era of higher dividends yesterday, laying out plans to slash nearly 50,000 jobs and shrink its investment bank across the world by a third to combat sluggish growth.
Europe's largest bank plans to reduce full-time employees by 22,000 to 25,000, or about 10 per cent, Reuters reported, quoting a statement from chief executive Stuart Gulliver.
A further 25,000 positions will be cut through the sale of its Turkey and Brazil operations.
The bank also set its new target for return on equity at greater than 10 per cent by 2017, down from its previous target of 12 to 15 per cent by next year, said Reuters.
HSBC has come under pressure to reduce costs and reverse a decline in profit after a year that saw the bank being fined for manipulating currency markets and embroiled in a tax-avoidance scandal in Switzerland.
Since taking over in 2011, Mr Gulliver, 56, has announced more than 87,000 job cuts, pulled out of 78 businesses and reduced the number of countries the bank operates by 15, to 73.
Staff numbers will drop from 295,000 in 2010 to 208,000 by 2017, reported Agence France-Presse.
In the latest round of job cuts, as many as 21,000 of the cuts will be lost in a push for digital banking, automation and branch closures.
In Britain, up to 8,000 jobs will be cut, Mr Gulliver said.
The cuts will be followed by some hiring in growth businesses and the bank's compliance division.
HSBC also said it will cut risk-weighted assets by US$290 billion, roughly a quarter of the amount at the end of last year. It will shrink risk-weighted assets in the investment banking business by US$140 billion, to less than one-third of the total, from the current level of around 40 per cent.
HSBC, founded 150 years ago in Hong Kong, indicated it will step up investment in Asia, expanding asset management and insurance, and focusing on places including China's Pearl River Delta and areas including the internationalisation of the yuan.
It spelt out the 11 criteria on which it will make the decision whether to move its head office from London.
The bank was likely to relocate its headquarters to Hong Kong owing to its low tax regime, said Hong Kong-based financial analyst Jackson Wong.
HSBC is among the hardest-hit by regulator scrutiny, with the Bank of England forcing the largest lenders to separate their consumer and riskier investment banking activities by 2019.
It has also been hurt by an increasing bank levy costing lenders about £5.3 billion (S$11 billion) over the next five years.