This morning Europe’s largest bank, HSBC, announced that it will be drastically cutting its UK workforce and is considering a relocation to Hong Kong following a new focus on the Asian market. These plans come as part of a wider global restructuring that aims to simplify the structure of the bank and save billions of dollars through cost-cutting measures.
The new money-saving scheme spells trouble for HSBC employees
Chief executive, Stuart Gulliver explained that the bank is trying to address poor returns at its investment bank and is hoping to free up $5billion in cost savings by 2017. Part of its plan of action includes dropping one in six of its current UK-based workforce and thousands more worldwide.
HSBC currently employs around 47,500 workers in the UK but this figure is set to drop by approximately 7,000-8,000, although precise figures are yet to be disclosed. An additional 22,000-25,000 jobs are also set to be cut as the bank extends its workforce culling operation to its overseas branches as well.
These extreme measures haven’t gone down well as many are accrediting the need to accrue savings to the gross misconduct of its senior and investment staff. HSBC is still battling with crippling penalties from US authorities following its attempt to manipulate the foreign exchange markets, while the dust still hasn’t settled on the Swiss tax evasion scandal either. Many see the unnecessary suffering of hard-working employees as a direct consequence of the bank’s irresponsible actions.
Plans to up sticks to Hong Kong could be on the horizon too
Headquartered in the UK since 1990, HSBC announced plans earlier this year to move its ring-fenced arm head office from London to Birmingham, which also sparked speculation of a Midland rebrand. However, the bank now appears to have bigger fish to fry as it was revealed that bosses are considering a relocation of its UK headquarters, with Hong Kong high on the list of favourites.
Although Hong Kong hasn’t yet been confirmed as the new location of choice, many believe this would be the case as the bank returns to its humble roots, back to where it was headquartered between 1865 and 1990. Bosses are aiming to reach a final decision on the potential relocation by the end of this year and have highlighted tax environment, scale of its presence, long-term stability and governmental support as contributing factors. The bank is calling for a government policy that is “in support of growth and development of financial services sector”.
As well as rumours of relocation, it has also been confirmed this week that the bank is set to leave some countries entirely. Bosses have confirmed that, so far, they have agreed to sell its Turkey business, shut up shop on a vast majority of its Brazilian branches and implement a substantial number of closures throughout the UK. There are currently 1,050 HSBC branches across the UK but this will decrease as plans for 40 closures enter into the pipeline, as part of the targeted 12% reduction in branch numbers.
It was only a couple of weeks ago that we were reporting back on HSBC’s brand new £8billion lending provision for small and medium-sized businesses in the UK, which can read more about here.
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