Britain’s biggest bank and Europe’s biggest lender HSBC is to slash nearly 50,000 jobs from its global workforce as the bank strives to cut costs in a fiercely competitive banking sector.
Boss Steve Gulliver says the cost-cutting drive, which includes axing the bank’s investment arm, will shear off a quarter of the bank’s assets.
The job cuts, nearly 20 percent of the total workforce, will be less-than-evenly spread, with half coming from Brazil and Turkey alone. HSBC’s British base will shed 8000, with the rest of the world accounting for the remainder.
“HSBC’s business is still running at too high a cost and its returns are below where Gulliver has promised they should be so it has raised some questions that maybe the bank is simply too big to manage and is too complex to deliver the returns that small and nimble banks can achieve,” says Reuters banking correspondent Steve Slater.
HSBC has been under regulatory fire of late, hit with heavy fines for market fixing, and its share price has suffered as a result. More legal trouble and fines could be on the way.
“I think investors are happy that at least they recognize their shortcomings, they’re doing something about it. They’re not sitting there, and do nothing. But I really doubt, personally, I don’t think they will achieve too much by cutting costs because costs are already cut to the bone,” says Geo Securities Limited’s Francis Lun.
This is Gulliver’s second stab at trimming the fat since taking the job in 2011. His first attempt was derailed by high compliance costs, fines, low interest rates and sluggish growth.