HSBC Holdings Plc is planning to cut up to 10,000 jobs, according to a recent report in the Financial Times. The cuts are part of a cost-reduction plan under new interim chief executive Noel Quinn. Around 4% of the banking group’s global workforce could be axed, although there are no details yet on which areas would be most affected.
According to two sources, the cuts will be made at high levels of the bank, which had 237,685 full-time employees at the end of June 2019. The news comes after the announcement of around 4,700 jobs, alongside the departure of former CEO Joe Flint in August.
Grasping the Nettle
One source told the Financial Times, “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.” HSBC is not alone in scaling back its workforce. Global banks including Deutsche Bank, Barclays, Societe Generale and Citigroup all announced cuts this year.
HSBC claimed a need to address, “a challenging global environment.”
August saw the unexpected departure of Joe Flint, as HSBC claimed a need to address, “a challenging global environment.” Some claimed that his dismissal came around partly because he was unwilling to make decisions on job cuts.
A Challenging Global Environment
With problems including low interest rates, Brexit uncertainty and trade conflicts, the banking giants had to act. However, it seems unlikely that job cuts will be seen in Asia, which accounts for nearly 80% of the group’s profits. Indeed, HSBC recently announced plans to increase its wealth management staff in the region by 300.
The banking group had previously outlined plans to revitalise its US business, which has underperformed for some years. In June, they announced they would hire more than 300 employees and add 50 new branches in new and existing markets in the region.
A Familiar Feeling
The new job cuts will likely follow a similar pattern to those announced in August. Then, HSBC targeted high-paid staff. A 2% reduction in staff numbers reduced the wage bill by 4%. At the time, these cuts affected most parts of the bank.
HSBC expected to pay between £527 million and £559 million ($650 million and $700 million) in severance costs for departing staff members.
Although HSBC has yet to comment on the story so far, it could announce the news when it reports its third-quarter results. Reports also suggest that divestment in HSBC’s retail operation in France could account for many of these jobs. The potential French retail sale was reported last month, although a union representative later denied the reports.