HSBC cuts headcount by 35,000 in next three years

HSBC announces 35,000 job cuts while profits plunge

It also reported a loss before tax of $3.9 billion in the fourth quarter of 2019.

The bank continued to reshuffle its senior ranks and said private banking head Antonio Simoes would leave the London-based lender later this year, after the unit was folded into its wider retail and wealth business.

The bank's plan also involves scrapping about $100 billion in assets by the end of 2022, and it will reduce costs by $4.5 billion.

The Hong Kong-headquartered bank is also warning that the Coronavirus outbreak may impact performance in 2020.

The bank has been carrying out a corporate overhaul created to boost profitability by focusing on high-growth markets in Asia while shedding businesses and workers in other countries.

Reacting to the HSBC restructuring plan on Bloomberg Television, Alan Higgins, chief investment officer of Coutts & Co, said the fresh strategy made sense, but that it was "on the conservative side". Whilst the bank had initially only said that the appointment process for a permanent CEO was "ongoing" and in line with its "original timetable", it earmarked a six to 12-month timeline for making an announcement when pressed by analysts seeking for signs of stability.

The bank expects to incur restructuring costs of around $6bn and asset disposal costs of around $1.2bn during the period to 2022, with the majority of restructuring costs incurred in 2020 and 2021.

HSBC's shares slid 2.2 percent in Hong Kong, outstripping losses in the broader market.

"Achieving the ROTE [return on tangible equity] target will be dependent on revenue and growth assumptions, which are likely to be more challenging if the [Hong Kong] banking sector stays weaker for a couple of years", Morgan Stanley analysts led by Anil Agarwal said in an investor note after the results.

"We aim to increase our business and investment in Asia and in Hong Kong", he said.

In the USA, where returns have lagged the Asian operations for years, HSBC said it would cut the retail branch network by nearly one-third and move fixed-income trading to London, reducing operating costs by as much as 15%.

The shake up will see the United Kingdom investment arm downsized, with a concomitant reduction is sales, trading and equity research in Europe and the transfer of structured products to Asia. It also plans to merge its private banking unit, which provides services to the wealthy, with its retail bank unit. The bank later exited businesses and cut tens of thousands of jobs. The remainders include two were "partly on track" - growth in its worldwide network and simplification of the organization coupled with investment in future skills - the "off track" priority of turning around its US business and achieving 6 percent return on tangible equity by 2020.

Employment union Unite, which represents almost 20,000 HSBC staff mainly in Britain, said it has demanded urgent talks with the bank's management over the restructuring.

This will be the UK-based bank's third overhaul in a decade as it attempts to lift its profits. Riskier assets would be reduced by 35 per cent in Europe and 45 per cent in the US. The bright spot for HSBC remains Asia which has accounted for half of its revenue and 90 percent of the group's profit in recent years. In the U.S., HSBC plans to grow its international-client corporate banking business.

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