HSBC Holdings plans to eliminate 30,000 jobs by the end of
2013, or about 10 percent of staff at Europe’s largest bank, to curtail surging
salary costs while hiring more people in emerging markets.
A bigger workforce and wage inflation helped drive costs to
57.5 percent of revenue in the first half from 50.9 percent a year earlier,
London-based HSBC said Monday in a statement.
That’s more than the 48 percent to 52 percent target range
set by HSBC, which posted a 36 percent increase in profit for the first six
months of 2011.
“The market is likely to interpret the job cuts in a
positive way,” said Neil Smith, a banking analyst at WestLB AG in London. “HSBC
needs to keep their costs under control.”
HSBC aims to reduce expenses by as much as $3.5bn over the
next two years as it tackles wage inflation in faster- growing economies and
prepares for stricter capital rules.
Credit Suisse Group, UBS, Bank of America and Goldman Sachs
Group are also cutting payrolls as investment banking revenue weakens.
European banks have slashed 230,000 jobs since the start of
the financial crisis in 2007, according to Bloomberg Industries.
The cuts will affect “support staff where we believe we have
created an unnecessary bureaucracy in this firm over a number of years,” said
Stuart Gulliver, chief executive officer.
The company’s cost efficiency ratio for its Asian unit was
45.2 percent in the first half, according to a statement in Hong Kong.
HSBC already has cut 5,000 of the jobs and may hire 3,000 to
4,000 people a year in emerging markets, Gulliver told journalists. The 30,000
jobs exclude employees leaving when assets are sold, he said. The target
doesn’t take into account cuts that could follow the UK Independent Commission
on Banking’s report in September, Gulliver said. The panel may force lenders to
separate consumer and investment banking units.
Unite, a British trade union, described the restructuring as
“brutal” and said it was unfair that employees were paying for a banking crisis
for which they were “in no way responsible.”
HSBC, the first British bank to report earnings for the
first half, said profit rose to $9.22bn from $6.76bn a year earlier.
Pretax profit at HSBC’s European unit tumbled 39 percent to
$2.15bn. The region accounted for 19 percent of HSBC’s profit in the first
half, compared with 32 percent a year ago.
Pretax profit at the lender’s global banking and markets
unit, which includes investment banking, fell 12 percent to $4.81bn, hurt by
its fixed-income business in Europe as the continent’s sovereign debt crisis
forced Greece to accept a second bailout.
Total operating revenue at the unit fell to $9.7bn from
$10.4bn as the bank suffered “weaker” credit and rates trading revenue in
Europe, it said.
Provisions for bad loans in the North American business fell
to $3bn from $4.55bn, HSBC said.
The proportion of profit HSBC gets from its Asian, Latin
American and Middle Eastern businesses rose to 76 percent in the first half,
from 64 percent in the same period last year.
“We remain positive on the outlook for emerging markets,”
the company said. “We expect a soft landing in China and we believe Hong Kong
is well-equipped to mitigate overheating pressures.”
In its consumer banking division, HSBC will focus on the UK,
Hong Kong, high-growth markets such as Mexico, Singapore, Turkey and Brazil,
and smaller countries where it has a leading market share, Gulliver told
shareholders in May. It plans to boost revenue at the unit by $4 billion in the
near-to-medium term, the bank said at the time.
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