HSBC Interim CEO Calls For A Major Restructuring: Thousands Of Jobs May Be Cut To Reduce Costs

HSBC Interim CEO Calls For A Major Restructuring: Thousands Of Jobs May Be Cut To Reduce Costs

HSBC, one of the largest banks in the world, uniquely listed on both London and Hong Kong securities exchanges and traces its roots back to Hong Kong in the 1860s, is forced to restructure its far-flung businesses.

The banking giant’s interim CEO, Noel Quinn, said that the company’s previous plan—which included cutting about 10,000 employees last month (on top of a prior round of downsizing 4,000 professionals)—were insufficient to turn the bank’s fortunes around. CNBC reported that the bank had an 18% one-year drop in pre-tax profit for the third quarter, according to Group CFO Ewen Stevenson.

It’s been reported by the BBC that HSBC plans to restructure its business due to unacceptable performance, particularly in parts of Europe and the United States. HSBC will look to slash costs by simplifying its well-known complex management structure and internal reporting lines. “There is scope throughout the bank to clarify and simplify roles, and to reduce duplication,” Quinn told Reuters. This is a not-so thinly veiled message that HSBC may indeed engage in another round of layoffs.

The bank’s positions in Asia, Europe and the U.S. were positively viewed by investors. They appreciated the diversification and growth potential of the emerging markets in Asia. Now, its business model is working against the bank. HSBC is staring down serous business headwinds. This includes the uncertainty surrounding Brexit, which impacts the United Kingdom and European operations. The protests in Hong Kong against China’s intervention has curtailed business and profits in that area. Continuing saber rattling regarding trade wars and tariffs between the U.S. and China is also a drag on HSBC’s performance. Similar to other banks, low interest rates are having an adverse impact on HSBC’s profits.

The U.S. is a big headache for Quinn. The bank’s retail banking franchise has struggled against stronger American rivals. HSBC incurred a loss of $189 million in the first nine months of the year—relative to its U.S. division.

Source: Forbes

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