HSBC Holdings Plc has restarted cutting as many as 35,000 jobs, three months after the coronavirus outbreak forced it to pause a long-awaited overhaul to boost profitability.
“Since February we have pressed forward with some aspects of our transformation program, but we now need to look to the long term and move ahead with others, including reducing our costs,” Chief Executive Officer Noel Quinn said in a memo published Wednesday.
The bank joins rivals such as Deutsche Bank AG and UniCredit SpA in forging ahead with job cuts that were put on hold at the outset of the pandemic. HSBC is also grappling with heightened global tensions, as its support for China’s planned Hong Kong security law opened up fault lines in its key market.
Unite, a workers’ union representing some of the bank’s U.K. staff, said the news would cause “great apprehension” among employees. “The question that must be asked today is ‘Why now, HSBC?’” said Dominic Hook, national officer at the union.
HSBC’s recent support for China drew criticism from U.S. and U.K. politicians, who say the proposed security law could erode freedoms promised in the “one country, two systems” approach that governed the former British colony’s return to Chinese rule in 1997. One of the bank’s top shareholders, Aviva Investors, has said the decision made it “uneasy.”
In February, Quinn unveiled a restructuring that involved lowering the sprawling global lender’s 235,000-strong workforce by about 35,000 over the next three years. The lender is targeting cost reductions of $4.5 billion at underperforming units.
Europe and the U.S. are expected to face the brunt of the cuts as HSBC attempts to turn around its businesses in regions where it has struggled to make money. The lender’s global banking and markets business, which houses its corporate advisory unit, is expected to face significant reductions in areas such as equities sales and trading.
As part of the revamp HSBC has said it will reduce gross risk-weighted assets by more than $100 billion, or about 12%, by the end of 2022, with much of this expected to come from winding down parts of its investment bank.
HSBC is also eyeing the sale of some of its businesses and is already looking for a buyer for its French retail operations, the disposal of which would take several thousand staff off its payroll.
The restart of the plan was earlier reported by Reuters.
Many European banks are retrenching as ultra-low interest rates and the cost of changing regulations and technology batter their old business models. Standard Chartered Plc, HSBC’s main U.K.-based rival in Asia, has so far kept its pledge to protect jobs throughout the coronavirus pandemic. The lender froze hiring as it focused on preserving the jobs of existing staff.
“Despite banks’ commitments to retain staff through the pandemic crisis, we believe it is only a matter of time before substantial further cost-trimming plans are announced, with efficiencies identified as we work through the Covid crisis important in this context too,” John Cronin, an analyst at Goodbody, wrote in a note.