Europe's biggest bank, HSBC has announced it is cutting 50,000 from its global workforce to reduce costs by up to $5 billion in the next two years, to simplify its structure and focus on the faster-growing Asian markets.
”HSBC is now undertaking a significant reshaping of its business portfolio. It is redeploying resources to capture expected future growth opportunities and adapting to structural changes in the operating environment,”said an official statement published Tuesday.
HSBC intends to close branches in Turkey and Brazil, identified by CEO Stuart Gulliver in February as among four “problem” markets where HSBC would seek more extreme restructuring measures. This means HSBC will eliminate 25,000 of the 50,000 job losses in those two countries.
The rigid measures will allegedly allow the bank to concentrate on Asian market.
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“The world is increasingly connected, with Asia expected to show high growth and become the centre of global trade over the next decade. I am confident that our actions will allow us to capture expected future growth opportunities and deliver further value to shareholders,” said Gulliver in the statement.
HSBC cut 37,000 jobs in 2011-2014, but didn’t meet expectations, as the costs associated with regulatory compliance increased a lot in recent years and its results in Asia have been disappointing.
HQ relocation
The bank is also considering moving its headquarters from the UK, a final decision will be made at the end of the year, and the HSBC name will disappear from Britain's high streets. The HSBC brand and logo may be replaced by Midland Bank it acquired in 1993.
The reason for that are strict regulatory measures, as the British government has raised the bank levy nine times since it was introduced, taking in about $8.1 billion, reports the British Bankers’ Association.
Britain’s possible leaving the EU, known as Brexit, may also become a factor, as the British government has been warned about the potential loss of confidence and fallout effect should it happen.
The 11 criteria HSBC will use to determine its HQ location: London: note H and I Hong Kong: note D and G. pic.twitter.com/3wIzdkTE5m
— Peter Thal Larsen (@peter_tl) June 9, 2015
HSBC was accused of tax fraud and money laundering in Switzerland. Swiss prosecutors launched a money laundering investigation against HSBC’s office in Geneva in February. The investigation was based on so-called Swiss Leaks, which provided information until 2007 about more than 100,000 clients with accounts worth $100 billion. HSBC agreed to pay $43 million in compensation to Swiss authorities to avoid charges.
HSBC was founded in 1865 in Shanghai and Hong Kong, and later moved its headquarters to London in 1993 after buying Midland Bank in Britain.