HSBC said Tuesday it will shed nearly 50,000 jobs, slash its investment bank and shrink its risk-weighted assets by US$290 billion in an effort to improve its sluggish performance, Reuters reported.
The announcement to the Hong Kong stock exchange came ahead of a presentation to investors and analysts by chief executive Stuart Gulliver.
During the presentation, Gulliver is expected to give more more details of his second major strategic plan for the bank since he took the helm at the start of 2011.
The job cuts will affect almost a fifth of the bank’s workforce. It will involve 25,000 staff from the expected sales of the lender’s Brazil and Turkey units and 22,000-25,000 from the consolidation of IT and back office operations and branch closures.
The cuts are the latest in a series of heavy staff reductions and will leave the bank with around 208,000 full-time equivalent staff, down from 295,000 at the end of 2010 and 258,000 at the end of 2014.
However, the cuts, to be completed by 2017, will be followed by some hiring in growth businesses and the bank’s compliance division.
HSBC did not say how many people will be recruited.
“Slaughtering the staff is not necessarily the solution unless management makes the bank considerably less complex,” said James Antos, analyst at Mizuho Securities Asia.
HSBC also said it will shrink the global banking and markets division to less than one third of HSBC’s US$2.6 trillion balance sheet. Its current level is around 40 percent.
Investors had been calling for more radical cuts at the global banking and markets division, whose returns have suffered in tough market conditions, the report said. Gulliver ran the division for five years.
The bank set its new target for return on equity at greater than 10 percent by 2017, down from its previous target of 12-15 percent by 2016.
It confirmed the planned sale of its units in Turkey and Brazil, adding it would keep a presence in the latter to serve corporate clients.
“The market is likely to respond positively on the move with investors having a much clearer idea of HSBC’s direction going forward,” said Steven Leung, a sales director at UOB Kay Hian in Hong Kong.
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