HSBC to cut down 35,000 jobs due to fall in profit by a third

After a dip in profit by a third in 2019, HSBC has announced to cut down 35,000 jobs as a part of overhaul of its business.

 

It will axe jobs across all business lines, impacting investment banking in the UK and retail distribution in the US.

 

HSBC’s profits before tax for 2019 dropped 33% to $13.3bn and the bank said the job cuts are part of a plan to reduce costs by $4.5bn by 2022.

 

The bank is also warning that the Coronavirus outbreak may impact performance in 2020.

 

CEO Noel Quinn said, “The Group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns. We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment, and build a platform for sustainable growth. We have already begun to implement this plan, which my management team and I are committed to executing at pace.”

 

As a result of this overhaul, the UK investment arm will be downsized, with a concomitant reduction is sales, trading and equity research in Europe and the transfer of structured products to Asia.

 

The US business will also be repositioned as an international client-focused corporate bank with a targeted retail offering, cutting the branch network by around 30% and investing in digital and unsecured lending for high net worth clients.

 

The shift will entail the consolidation of middle and back offices and the reorganisation of global functions and head office to match the new structure.

 

The bank expects to incur restructuring costs of around $6bn and asset disposal costs of around $1.2bn during the period to 2022, with the majority of restructuring costs incurred in 2020 and 2021.