Thousands of jobs are being cut, more than 70 bank branches are being closed: the British bank HSBC has to save. Business has not been running in the important markets in Asia for a long time. It is an opportunity for the interim boss to prove himself.
The major British bank HSBC is facing difficult times after a slump in profits: 35,000 jobs will be cut, investment banking cut and business in Europe and the USA downsized, as HSBC announced when the annual balance sheet was presented. In 2019, pre-tax profit slumped a third to $ 13.3 billion, primarily because of the $ 7.3 billion amortization charge.
With the radical restructuring, Europe’s largest bank, which does most of its business in Asia, is responding to slower growth in its key markets, the strain of Brexit and low interest rates.
Finally, the effects of the bank’s corona virus made business difficult. In addition, the goal is to make the major bank, whose profitability has been lagging behind rivals for a long time, more competitive.
“Our headcount is likely to drop from 235,000 to close to 200,000 over the next three years,” interim chief Noel Quinn told Reuters. Overall, he wants to reduce potential risks to the balance sheet by $ 100 billion. In Continental Europe, they are expected to drop by 35 percent, and the share business will be reduced.
HSBC boss has to assert himself
In the United States, the bank plans to close a third of its 224 branches and in the future will only focus on international and wealthy customers. In addition, HSBC wants to simplify its corporate structure and is therefore merging two divisions:
The private customer and wealth management division will be merged with the private banking business. This creates one of the world’s largest wealth management businesses.
These cuts are expected to increase yields to ten to twelve percent by 2022, after falling to 8.4 percent in 2018 (2018: 8.6 percent). The bank plans to cut costs by $ 4.5 billion.
Quinn has been acting as the company’s chief executive since August after his predecessor John Flint had to head the company after just 18 months. He had been accused of not responding radically enough to the deteriorating business situation.
With his strategy now presented, Quinn is applying to take over the post permanently. A decision whether Quinn takes over the post permanently should be made by August at the latest, according to HSBC.
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