8,000 UK jobs at risk in HSBC cull
Banking giant HSBC has confirmed plans to axe up to 25,000 jobs worldwide including as many as 8,000 in the UK and revealed it is to rebrand its British high street operations.
The bank said the job losses are part of a overall cull which will reduce its total full-time workforce by around 10% to slash costs and overhaul the business, while it will also shrink its employee base by another 25,000 amid plans to sell off operations in Turkey and Brazil.
HSBC - which employs around 48,000 of its 258,000 staff in the UK - added that its UK retail bank which is being relocated from London to Birmingham by 2019 amid regulatory ''ringfencing'' rules, will operate under a new brand name that is yet to be decided on.
The group also delivered a blow to customers by announcing aims to trim its worldwide network of branches by 12%, with the UK being one of seven regions to be impacted.
It declined to give further details for UK branch closures.
Speculation is mounting that plans to rename HSBC's retail arm will see a return of the Midland brand to the high street, as its UK branches used to be known as Midland Bank before they were swallowed up by HSBC in 1992.
HSBC has 1,057 branches across the UK.
The swingeing job cuts comes as the bank seeks to deliver annual cost savings of around 4.5 billion US dollars (£2.9 billion) to five billion US dollars (£3.3 billion) by the end of 2017.
The group also announced aims to sell its businesses in Turkey and Brazil, because they do not have the scale needed to compete with rivals.
In its keenly-awaited strategy update, HSBC added it would make a decision about where to base its headquarters by the end of the year, after announcing recently that it was considering a move away from the UK due to regulatory and structural reforms.
If given the go ahead, it would likely take the bank two years to move its headquarters.
HSBC said it was undertaking a "significant" reshaping of the business.
Chief executive Stuart Gulliver said: "We recognise that the world has changed and we need to change with it."
The bank said it would target a reduction of its group risk-weighted assets of around 290 billion US dollars (£189 billion) - including reducing its investment banking division to less than a third of its balance sheet.
It added that it wanted to return the global banking and markets division to profitability - an area which has become more expensive for banks in the tougher regulatory environment since the financial crisis.
The Unite union said the UK job cuts were the latest example of a workforce being punished for the misconduct of senior and investment bankers.
Dominic Hook, Unite national office for finance, said: "Unite are seeking to meet with UK chief executive Antonio Simoes as soon as possible to demand that any redundancies are through voluntary means or managed through natural attrition.
"After all the scandals of recent years, frontline staff have suffered time and time again as they are forced to pay for the mistakes of others with their jobs, their terms and conditions and their reputation."
HSBC has been hit by Britain's banking levy - which last year cost it 1.1 billion US dollars (£720 million) - as well as new industry rules on "ringfencing" retail banks serving customers and business clients from more risky investment divisions.
The head office of HSBC's UK retail bank is being relocated from London to Birmingham by 2019 amid the new ring-fencing rules and HSBC is said to be considering a sale of the business.
The HSBC strategy update comes a day ahead of George Osborne's Mansion House speech, with reports suggesting the Chancellor will signal a review of the bank levy in an attempt to prevent major banking players such as HSBC from relocating their headquarters away from Britain.
Mr Gulliver is attempting to reassure shareholders that management focus on cutting costs remains undiminished after a series of recent scandals.
The update comes as HSBC is also in the spotlight after last week being hit with a 40 million Swiss franc (£28 million) fine to settle an investigation by prosecutors in Geneva into alleged aggravated money laundering.
Authorities raided the premises of the group's controversial Swiss private bank in February, following allegations that it helped to hide millions of dollars for arms dealers while helping others avoid taxes.
The investigation came about after an ex-employee leaked a list of thousands of suspected tax evaders to French authorities in 2008.
The bank said under its new strategy it will also target growth in Asia by expanding its insurance business and its presence in China's Pearl River Delta region.
In February the bank posted a 17% slump in annual pre-tax profit to 18.7 billion US dollars (£12.1 billion) after suffering a challenging period that saw its income fall due to a number of one-off factors including the settlement of regulatory fines.
But Mr Gulliver, who became chief executive four years ago after joining the board in 2008, received £7.6 million in pay and bonuses last year, 5% down on the previous year.
Since 2011 the bank has been hit by 11.2 billion US dollars (£7.3 billion) of fines and charges from regulators around the world.
Mr Gulliver said: "The regulatory landscape has changed dramatically during this period."
The announcement marks Mr Gulliver's second major strategic announcement since 2011. Intitially he sold a number of under-performing businesses and exited 15 countries in a bid to cut costs. He also hired thousands more compliance staff amid intense regulatory oversight of the banking industry.
But brokers at Shore Capital said the latest overhaul was " rather uninspiring", with HSBC's shares falling by just over 1%.
Shore Capital added that the strategy update "essentially reaffirms previously held commitments around costs, returns and dividend policy, while aiming to add flesh to the bones of how these will be achieved".
Hargreaves Lansdown head of equities Richard Hunter welcomed moves by the lender to bear down on costs and accelerate its Asian investment, but added that much of the announcement had been previously trailed.
He said: "The announcement is receiving mixed reviews, with the result that the share price is virtually flat."