HSBC job cuts: London in the centre of the storm

On the face of it, a profit of £10 billion for 2019 doesn’t look too shabby but it’s down sharply on the year before and HSBC has decided an overhaul is called for.

The job cuts had been well trailed but the scale is far greater than had been expected.

Over the next three years worldwide headcount will fall from 235,000 to “closer to 200,000” in the words of Noel Quinn, interim chief executive.

HSBC employs 41,500 in the UK.

Job losses here will be “meaningful” although, unhelpfully, the bank is refusing to publish a meaningful number.

HSBC’s retail bank in the UK (its 621 branches and the staff who work in them) look relatively safe for now.

The business showed “great resilience” last year and is seen as a having brighter prospects.

Job losses in the UK will be 'meaningful.' Credit: PA

The divisions that are misfiring are those at risk: HSBC’s investment banking operations in London and New York employ a lot of people and aren’t performing; its retail bank in France is barely profitable; its retail bank in the US is loss-making, one third of the branch network there will shut.

HSBC wants to cut its costs by $4.5 billion by 2022.

London will remain “a hub” for HSBC’s investment bank but it will undoubtedly take a hit as the bank shrinks activity and “rebalances” towards Hong Kong and Singapore where the pickings are richer.

The presentation to investors this morning suggests HSBC will significantly reduce the size of its equities, derivatives and rates businesses.

HSBC wants to cut its costs by $4.5 billion by 2022. Credit: PA

HSBC also plans to merge its “back and middle office” sections of its commercial bank and its investment bank.

Once again, there’s every chance that the jobs which are shed as a result will be felt in London and Birmingham.

UNITE, the union, represents nearly 20,000 UK staff, in branches, call centres and back office roles, has called for urgent talks with management and criticised what it said was “yet another major reorganisation” by the bank.

“Despite HSBC still making billions of dollars of profit, once again hardworking and dedicated staff have woken up to the news that their job could be at risk,” David Dominic Hook, UNITE’s national officer for finance.

In 2015 HSBC laid off 10% of its global workforce, including 8,000 people in the UK.

The bank now believes that growth around the world will be lower than it previously expected and, with interest rates low too, the bank needs to reshape itself further.

HSBC is listed and headquartered in London but trades in more than 60 countries and does an ever increasing proportion of its business in Asia, which accounts for half of the bank’s sales and the lion’s share of its profits.

The bank said the coronavirus outbreak has caused significant disruption to its activity in China and Hong Kong and expected losses as a result.