HSBC announced job cuts of 35,000 this morning, out of its 235,000 employees across 50 countries. This is not good: It’s the biggest bank in Europe by assets. The Wall Street Journal reports that the bank is abandoning some of its Western staff and operations, for a few reasons:
- Plummeting profits. Net profits for 2019 were down 53% from last year. “Parts of our business are not delivering acceptable returns,” said interim CEO Noel Quinn.
- Unstable markets. HSBC is deeply enmeshed in Hong Kong and China, which are rocked by protests in Hong Kong and trade tensions between the U.S. and China, as well as the Covid-19 outbreak.
- Brexit. While HSBC will maintain a global hub in London, the bank considers U.K. markets unstable and wants out.
HSBC will now restructure, pulling back on U.S. and Europe operations to refocus on Asia and the Middle East. HSBC already makes half of its revenue in Asia, and will now operate mostly out of Hong Kong and Singapore. HSBC was originally founded in Hong Kong 155 years ago. Stateside, expect to see a third of its 229 U.S. branches close.
Up next: HSBC is also midway through a CEO search, since kicking former CEO John Flint to the curb last August. Consider today’s overhaul announcement by interim CEO Noel Quinn to be his further bid for the permanent gig. (He may want to check out the Conference Board’s report showing that interim CEOs rarely become permanent ones.) Quinn has not hesitated to oust executives and reshape the entire bank while in a temporary role.