HSBC Bank To Cut 35,000 Jobs, Shed $100 Billion In Assets As Profits Plunge

[Hydrogen]

Banks around the world are supposed to benefit the most from central banks inflating assets, and hyperinflating stock markets, but over the past few years, central banks have instead caused some of the biggest bank job cuts in half a decade.

HSBC, Europe's largest bank and troubled lender, although not nearly as troubled as Deutsche Bank, said it would cut upwards of 35,000 jobs, shed $100 billion in assets, and take a massive $7.3 billion hit to goodwill as part of a major overhaul under Chairman Mark Tucker, the company said in a press release on Tuesday morning.

This comes months after HSBC's interim CEO Noel Quinn unveiled plans to "remodel" large parts of the bank. The restructuring of the London-based bank is being led by Quinn, who replaced John Flint in August on an interim basis. Quinn is vying for the permanent role of CEO, which the bank said will be decided this year.

Europe's biggest bank by assets is expected to focus more on Asia and the Middle East, while it winds down operations in Europe and the US; HSBC derives at least 50% of its revenue in Asia. The bank said net profit plunged 53% to $5.97 billion last year, due to the $7.3BN goodwill hit and also thanks to the record low interest rates and NIRP unleashed by central banks.

Tucker said the bank faces substantial challenges in the UK, Hong Kong, and mainland China. He also issued a warning over the Covid-19 outbreak in China and quickly spreading across Asia to Europe, indicating that the virus could impact the bank's performance this year.

Quinn confirmed the bank would cut 15% of its workforce over the next two-three years. This is on top of the 10,000 jobs it axed in Oct.

"The totality of this program is that our headcount is likely to go from 235,000 to closer to 200,000 over the next three years," Quinn told Reuters. adding that "HSBC will be “exiting businesses where necessary."

“Around 30% of our capital is currently allocated to businesses that are delivering returns below their cost of equity, largely in global banking and markets in Europe and the U.S.,” he noted.

In its long-struggling U.S. arm, Quinn said HSBC will cut assets in investment banking and markets by almost half, and shut around 70 of its 229 branches. As of September, HSBC was the U.S.’s 14th largest commercial bank according to Federal Reserve data, with around $181 billion assets. Mr. Quinn said he had considered putting the unit up for sale but decided against it because the U.S. is a crucial part of the bank’s global network.

HSBC shares slid 6% on the restructuring news on Tuesday morning.

The benefits of the restructuring will be evident largely from 2023 onward, said Citigroup analyst Ronit Ghose, who recommended investors sell HSBC shares.

And to think it was only last year when 50 banks laid off 77,780 jobs, the most since 91,448 in 2015.

With the global economy quickly decelerating, and a virus shock that could tilt the world into recession, if we had to guess, tens of thousands of more banking jobs will be slashed this year.

https://www.zerohedge.com/markets/hsbc-cut-35000-jobs-profits-plunge

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Does the significant decline of our traditional banking industry represent a similar paradigm to how competitors to amazon and walmart declined in the face of superior business models.

Perhaps 3rd party payment apps and alt currencies are slowly but surely whittling away at banks traditional market share, which is fueling this decline. Even  though market analysts and experts might be too conservative to voice this opinion.

One of bitcoin's famous slogans is: "be your own bank".  Perhaps now is a great time for that slogan to become a reality.

[dothebeats]

We've been seeing a lot of declines on HSBC lately due to their involvement on several large-scale money laundering events. They are constantly on the watch list of several nations due to their known scheme of mediators of illegal money. Add to that their proximity to HK, which is still in turmoil right now due to its citizens' aggression towards Beijing there's loads of things going on with HSBC that the fecline is understandable, whereas on other banks it is business as usual. People still trust banks a lot even though a lot of these scandals are being publicized. It will be a hot topic for a few weeks then fade into oblivion as if nothing happened.

[Captain Corporate]

 It is both sad and tragic to think that a company that made over 5 billion dollars in profit is firing 35 thousand people just because "they didn't profit enough". That is right, 35 thousand people and with their families an estimated 70 THOUSAND PEOPLE will suffer unemployed, all because HSBC wasn't making enough profits with over 5 billion dollars. What could potentially happen if HSBC kept those people? They might make 5 billion dollars in profit and not 10 billion but they would help with the economy of the whole world. If they kept those stores they have open they would bring more to the economy of the places they are based in, not just the people who work there but the places those people spend money as well.

 This is what banks became, they are not caring about people because to them it is simply numbers, statistics, when they see 235k people working for them and they see less profits (still profiting more than any of those people will ever see in their life time combined) they just fire people without caring about any of them and try to make more and more profits if they could in order to keep the shareholders happy and get big fat checks as bonuses.

 If a place decides to fire too many people all at the same time like this one, I would say there should be some system in place to make sure those people have a decent future for a while until they find a better job, not forever until they die but for like 1-2 years just in case. Otherwise these huge lay offs will continue to happen and we will see places like wallmart, banks, other big places with a lot of employees will try to fire their people all the time for more profits, it has happened more and more frequently recently and it will only get even more frequent if nothing is done about it.

[jackg]

I think they've been winding down for a while...

I don't know how Asia are going to do for them either, brics don't look like the best investment for stability but at least we're getting rid of them from our soil...

All most companies seem to do these days (especially banks) are to either have an inner circle of people they give good rates to and charge the rest a really high interest rate that's unreasonable for them to charge in these times... There was a stated rise in decentralised finance and there's no wonder when banks can set personal loans at 20+% and even payday loans are capped at 8 and defi is less than 7 (but can be close to zero)...

I think the euro has lost some trust and stability by sending its interest rates down into the negative so it'll be interesting to see how that recovers but another bank will replace HSBC I don't think anyone was particularly attached to them or cared how well they did...

[LeGaulois]

HSBC is not the only bank to lay off employees either. Among European banks, the figure is estimated at 100,000. Nowadays the banks are still breathing because they manage state debts and the central bank recycles old debts, it is not a profitable business.

Twenty years ago HSBC made the choice to have fewer branches on one side and more traders on the other. But nowadays with robots traders, automation and all the new technologies, this choice is no longer adequate. The only way out is to restructure.

The bank is doing well in Asia but struggles in the US and Europe (low-interest rate, the fight between USA and China, Brexit, etc...), 5 billion dollars in profit but its operating cost is estimated at 4.5 million dollars so not difficult to understand a decision has to be taken.

[fiulpro]

They are doing this because they are gaining enough profits , as listed in the post.
I know banks that are shutting down with owners in the Jail after them plunging in debts , both ways banks are shutting down.
The world debt is actually a serious crisis.
Some are facing more than the others. The developing countries are bearing the burden , I do think it is the time to introduce them to cryptocurrencies , that is what some government thinks too.
Like the Government in Germany is allowing banks to sell bitcoins.
The whole era is changing it's just the starting.

[davis196]

It is both sad and tragic to think that a company that made over 5 billion dollars in profit is firing 35 thousand people just because "they didn't profit enough". That is right, 35 thousand people and with their families an estimated 70 THOUSAND PEOPLE will suffer unemployed, all because HSBC wasn't making enough profits with over 5 billion dollars. What could potentially happen if HSBC kept those people? They might make 5 billion dollars in profit and not 10 billion but they would help with the economy of the whole world.

Every bank works as a business and every business is all about efficiency.If they think they aren't efficient enough,they will fire thousands of people,even if they have 5 billion USD profits.It's all about maximizing the profits.And that's perfectly normal for a business,they aren't a charity foundation after all.HSBC has shareholders,who want bigger profits.Digital banking is a thing and more and more banks will fire their employees.The people who were fired are well educated and qualified,they will find another job,so don't you worry about them.

[Broly46]

Cut more the jobs and Donald Trump will tell you unemployment rate is 0.1%, and his the sole contributor to the booming economy. BTW fat bonus for the top execs for the year end ensured.

[sheenshane]

Let's be clear. This is the new era of the World and HSBC is a business. A large scale one, a corporation with stakeholders and genius executives. Their goal for building the business is to have a stable salary, and profit of course.

The digital era is providing endless opportunities to profit and to achieve globalization. 35,000 employees isn't a big number anymore when it comes to employees as long as there is a large server who could give service around the world with a minimal error volume. Probably, this one is a good move. But we really not that sure because as we see banks are banks. They must play their role well enough.

[FanEagle]

I agree that the only thing a business focuses on shouldn't be just profits, shouldn't be just business, at least not when they are this big.

We are talking about a company with over 200 thousand workers, I understand that the small grocery store around the corner could think of their profits and I would understand it, the most they can do is to fire few help they have and that is about it, wouldn't change the economy too much, but we are talking about huge business that fire over 30 thousand people effecting maybe close to 100 thousand people around the world, that becomes bigger than just profits, that becomes bigger than just the business itself, it affects whole communities when they close down a store and fire everyone with it, that changes too much for a lot of people.

[abhiseshakana]

I think the current state and development of financial technology is undergoing a revolution. Many people think that conventional banks are a sunset business. Currently, the term banking 5.0 is known, namely banking activities carried out by non-bank institutions such as Alipay and similar applications.

Another example is the many online loan applications that with all the technological sophistication can provide loans in just a matter of hours. So many bank services began to be taken over by non-bank entrepreneurs.

Banks can still survive if they can change from profit-oriented institutions with reliable products based on interests into service-oriented institutions. Providing banking services by taking fees without conventional banking practices.

Business is business, when terminating mass employment relationships management considerations are certainly efficient. The analogy is as follows that competition is not only between banks but has evolved between banks and non-banks. Technological sophistication also brought almost all paperless work and the system could replace the role of workers behind the desk. Although the initial cost of the system is expensive, in the long run, it can reduce employee salary costs very significantly.

[batang_bitcoin]

A lot of other banking companies are also cutting their expenses and avoiding further losses through cutting their jobs. This is a worldwide issue and there's a serious reason behind it.
Banks Are Cutting 75,700 Jobs Worldwide
Article was written last December 2019.