Noel Quinn may only be an interim chief executive at HSBC but there’s nothing temporary about the sweeping changes he announced yesterday.
The dramatic reduction in headcount goes further than the 10,000 figure he floated in October last year, when he said “there is scope throughout the bank to clarify and simplify roles.”
Now we have a clear and simple figure: 35,000 jobs will go by 2022 — with the axe poised above the bank’s Canary Wharf tower and the investment banking operation.
HSBC has 235,000 employees around the world and cites a staff turnover of around 25,000 a year.
Some of the cuts will come by not filling vacated roles, but there will also be a significant cull — something likely to weigh on the minds of the bank’s London staff as well as those in the troubled US retail operation.
There’s also an expectation that, in time, technology will take on a larger amount of the work currently performed by humans.
The bank is far from alone in struggling to hold its own against US investment banking giants and, given Asia now accounts for around half of its revenue (and the lion’s share of its profits) the pivot east makes clear commercial sense. Put simply, “the world’s local bank” is going to look a bit more regional in the years ahead.
Analysts were, on the whole, supportive of the measures announced by Quinn. His strategy goes far beyond tinkering and could go some way to addressing one of HSBC’s longstanding issues: its sprawling bureaucracy.
Veteran City-watcher David Buik described the bank as “gargantuan and unwieldy” in a note yesterday, and Quinn would probably agree.
However, bringing clarity to the organisation should start with the top job, and many in the City were bemused that yesterday’s announcements didn’t include ditching the word interim from Quinn’s title.
Colin McLean of SVM Asset Management said the current arrangement “puzzles the market” while Goodbody analyst John Cronin went further, saying he was “staggered” Quinn wasn’t confirmed in the chief executive role.
Officially, HSBC aims to make a permanent appointment within the next six to 12 months, but given the scale of the reforms announced yesterday, and the scale of the challenges still facing the bank, investors will be hoping for a decision long before then.
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