HSBC pushes with Thousands of job Cuts in With Surprise CEO Exit
Redundancies have turned into a theme throughout the sector this year, amid low rates of interest and contracting earnings at costly trading branches. HSBC will strip out tens of thousands of jobs across its international business in an attempt to keep a rein on costs after the surprise departure of chief executive John Flint after just 18 months in the position.
Ewen Stevenson, the bank’s finance director, said on Monday that HSBC was seeking to cut 2 percent of its workforce, largely from senior roles. He said the redundancies would impact staff across company lines and decrease the bank’s wage bill by 4 percent. The bank employs around 235,000 individuals.
Stevenson was speaking after the launch of HSBC’s earnings for the second quarter on August 5. The bank reported a 7.4% year-on-year growth in net earnings to $5bn.
Group revenues rose 10 percent to almost $15bn — not including the effect of credit impairment charges — buoyed by execution from retail banking and wealth management and business banking; it was another disappointing 3 weeks for HSBC’s investment bank.
But, the profit increase was overshadowed by news that Flint, who joined the bank as a graduate trainee in 1989 and became its chief executive in February 2018, was stepping down.
His death has taken the market by surprise.
Russ Mould, investment manager at AJ Bell, the investment platform, said:”I do not think anyone saw it coming. This has come from the clouds. How in which the statement was done, it actually seems like it must have been a debate within the bank, somewhere, about something.”
Flint will be succeeded on an interim basis by Noel Quinn, HSBC’s international business banking, while the hunt for a permanent successor in ran.
Mark Tucker, HSBC’s seat, said in a memo to employees that change was required amid an”increasingly complex and challenging global environment” for banks.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, the fund , said:”With macroeconomic and geopolitical headwinds mounting, the HSBC board could be searching for more radical reform. What that will look like remains to be seen.” “It actually seems like it must have been a debate within the bank, somewhere, about something”
HSBC’s shares were down 1.3percent at 637.30 pence in morning trading. They stay down by nearly 9% for the previous year.
Redundancies have turned into a theme throughout the banking industry this year, amid low rates of interest and contracting earnings at banks’ costly trading branches.
In May, it appeared that HSBC was intending to strip hundreds of jobs out of its investment bank in response to the tough market conditions. Some of its rivals, such as Barclays, Citigroup, Deutsche Bank and Nomura, have taken similar actions in what’s been a brutal period for jobs cuts in the City of London.
Pre-tax profits at HSBC’s investment bank, known as international banking and markets and headed by London-based Samir Assaf, plunged 44% year on year to $1bn in the next quarter. Revenues at the branch dropped almost 13 percent to $3.6bn — not including the effect of credit impairment charges — although costs edged up.