HSBC delays ‘vast majority’ of redundancies amid COVID-19
HSBC’s new chief executive has announced that the impact of the coronavirus outbreak has forced it to delay most of the redundancies related to an overhaul of the bank.
In a memo to all staff on Thursday, seen by the Financial Times, Noel Quinn, the bank’s new CEO, wrote that the bank had decided to “pause, for the time being, the vast majority of redundancies associated with this [restructuring] programme”.
The move comes just a month after Quinn unveiled what he described as one of the “deepest restructurings” in HSBC’s history, including 35,000 job losses over the next three years, many of them via redundancy.
Quinn said the bank had decided to defer the redundancies “because of the extraordinary impact of the COVID-19 pandemic”.
He also announced a hiring freeze, writing that the bank “will pause external recruitment, other than for a small number of front-line and business critical roles and those already with written offers”.
Last week, the FT reported that coronavirus would force HSBC to delay parts of the restructuring, which will see the bank reduce the size of its balance sheet in Europe and the US.
One person briefed on the bank’s plans said the fact that so many of HSBC’s employees were working from home would complicate the redundancy process. The bank is also mindful of the human impact of implementing large-scale job losses when almost no companies are hiring new staff, the person added.
HSBC is one of several lenders that is partway through a large restructuring that could be derailed by the pandemic. German lender Deutsche Bank is in the throes of a downsizing that will involve shedding 18,000 jobs and selling or winding down hundreds of billions of euros’ worth of unwanted assets.
HSBC has said its restructuring will involve cutting annual costs by $4.5bn and shedding $100bn of assets adjusted for risk by the end of 2022, with the aim of reducing its headcount from 235,000 to 200,000 over three years.
In his memo on 26 March, Quinn said the restructuring measures unveiled in February “remain crucial”, signalling that the bank intended to restart redundancies when the coronavirus crisis passes.
He said the bank would continue to work on other aspects of the restructuring, such as combining the back offices of its commercial and investment bank and identifying assets that could be sold when markets normalise.
HSBC has also had to delay moves to exit some unprofitable or unattractive relationships with corporate clients, according to several people briefed on its plans.
The bank had wanted to tell the affected clients personally but has been unable to schedule face-to-face meetings due to the effective lockdowns in many of its markets.