LONDON — The British bank HSBC, in a major revamping of its global strategy, said on Tuesday that it would shed as many as 50,000 jobs as it sells several underperforming businesses, reduces the size of its global investment banking business and aims to cut billions of dollars in costs.þþThe bank said it would eliminate 22,000 to 25,000 full-time jobs, or about 10 percent of its work force, through restructuring by the end of 2017. It also plans to reduce its head count by an additional 25,000 positions through the sale of its underperforming businesses in Turkey and Brazil.þþHSBC said that it would increase its investment in Asia, where it generates more than half of its earnings, while it seeks to cut costs by up to $5 billion annually within two years. The bank said it would complete a review of whether to move its headquarters from Britain by the end of the year.þþThe Paris offices of HSBC. The bank’s headquarters are in London, where taxes are high.HSBC to Weigh Moving Headquarters From LondonAPRIL 24, 2015þProsecutors fault HSBC for enabling a corporate culture resistant to change.HSBC Is Deemed Slow to Carry Out ChangesAPRIL 1, 2015þStuart Gulliver, the chief executive of HSBC, offered an “everyday explanation” for the secret account.HSBC Chief Defends Swiss Bank Account Worth $7.7 MillionFEB. 23, 2015þStuart Gulliver, the bank’s chief executive, is under pressure to satisfy investors amid recent scandals that have damaged the lender’s reputation and as HSBC faces an increasingly challenging regulatory environment in Britain and across the globe.þþStuart Gulliver, HSBC's chief executive, is under pressure to satisfy investors amid recent scandals that have damaged the bank’s reputation. Credit Tyrone Siu/ReutersþThe bank, which has operations in 73 countries and territories, has exited dozens of underperforming businesses in recent years as it looks to cut costs and reduce its risk.þþInvestors did not seem impressed on Tuesday, with the bank’s shares down about 1.2 percent in late-morning trading in London. The stock value has fallen about 2.5 percent over the past year.þþ“This was not the massive shake-up some investors had been hoping for,” Chirantan Barua, an analyst at Sanford C. Bernstein, said in a research note. HSBC “has failed to bring out anything radically different from moves which have been widely expected for some months now.”þþRaul Sinha and Vivek Gautam, analysts at JPMorgan Chase, said in a research note that it was positive that the bank was taking actions to shrink its low-return businesses, but that “the changes announced are unlikely to positively impact earnings estimates.”þþThe plans announced on Tuesday are the second major job reductions at HSBC since Mr. Gulliver became chief executive in 2011. A number of the bank’s rivals, including Barclays, Credit Suisse and Royal Bank of Scotland, have announced similar plans to reduce the size of their work forces and exit higher risk businesses.þþHSBC cut about 37,000 jobs from 2011 to 2014, but it has not benefited as much as it had hoped from the move because costs associated with regulatory compliance skyrocketed in recent years and its returns in Asia were disappointing.þþThe lender spent more than $11 billion on regulatory and compliance charges in the past four years as it faced a number of investigations and agreed to a series of settlements related to accusations of money laundering and the rigging of foreign exchange markets.þþThe bank has also faced recent inquiries into its small Swiss private bank operation, as prosecutors examine whether it helped wealthy clients evade taxes.þþþThe overhaul of the HSBC was announced just days after Deutsche Bank said its co-chief executives, Anshu Jain and Jürgen Fitschen, would resign. Deutsche Bank has faced pressure from investors as its legal and regulatory costs have risen drastically in recent years.þþLike many of its rivals, HSBC is looking to reduce the amount of riskier assets on its balance sheet, including cutting the size of its global banking and markets business and focusing on strategically important and profitable businesses.þþHSBC said it would reduce so-called risk-weighted assets, a measure of the risk of the capital it holds, by 25 percent, or about $290 billion. About half of those reductions will come from the investment banking business, the lender said.þþThe sale of its operations in Turkey and in Brazil had been anticipated for some time, but the bank said it would keep a presence in Brazil to serve large corporate clients.þþIn February, Mr. Gulliver identified the Brazilian and Turkish businesses among four “problem” markets where HSBC would seek more extreme restructuring measures if returns did not improve. The bank is also seeking improvement in its operations in Mexico and in the United States.þþWhile it sought to cut costs by up to $5 billion annually within two years, the lender said it expected to book restructuring costs of $4 billion to $4.5 billion over that period.þþIn April, HSBC announced that it was formally reviewing whether to move its headquarters from Britain. The bank is facing a shifting regulatory landscape in Britain that includes a bank tax that has hit British lenders particularly hard.þþThe government has raised the bank tax, known as a bank levy, nine times since it was introduced, taking in 5.3 billion pounds, or about $8.1 billion, according to the British Bankers’ Association.þþHSBC’s payment has more than doubled since 2012. The tax cost the bank about $1.1 billion in 2014, when HSBC reported a profit of $13.7 billion.þþThe bank, which traces its roots to Hong Kong, has been based in Britain since 1993.þþBanks in Britain will be required by 2019 to shield their retail banking operations from the effects of investment banking and other activities in the event of another financial crisis — a process known as ring-fencing.þþAs part of its restructuring, HSBC said that it planned to begin setting up a ring-fenced bank in Britain.þþDespite reducing the size of its business in some markets, HSBC said it planned to expand its asset management and insurance operations in Asia in hopes of capturing “expected opportunities from emerging wealth in the region.”þþIt also plans to increase its business in the Pearl River Delta area in the southern Chinese province of Guangdong, and in parts of Southeast Asia.þþ“The world is increasingly connected, with Asia expected to show high growth and become the center of global trade over the next decade,” Mr. Gulliver said in a news release. “I am confident that our actions will allow us to capture expected future growth opportunities and deliver further value to shareholders.”þ
Source: NY Times
