Holdings PLC plans to slash thousands of jobs and slow investment spending after the surprise ouster of Chief Executive John Flint.
Up to 2% of the bank’s 237,685 employees could lose their jobs, a bank executive said Monday, as HSBC flagged a worsening outlook for the global economy in its second-quarter results.
Finance director Ewen Stevenson in an interview said the job cuts, which will be targeted at senior roles, would shave up to 4% off HSBC’s wage costs and would come from a mix of layoffs and attrition as people leave for other jobs. HSBC said severance costs this year would be $650 million to $700 million, and save it that much annually going forward.
HSBC late Sunday said Mr. Flint had agreed to leave the CEO job after just 18 months, ending the 51-year old’s three-decade career at the bank. Chairman Mark Tucker in an interview said Mr. Flint’s departure doesn’t signal any change in strategy, but that the board felt a leadership shift was needed to respond to “an increasingly complex and challenging global environment.”
Mr. Tucker said on Monday the bank remains focused on building out its business in China, which had been a priority for Mr. Flint and his predecessor, Stuart Gulliver. Asia-focused HSBC, already China’s largest foreign bank, has long aspired to grow further in the country’ retail and business banking market. Its relationship with China was tested, though, last year when U.S. prosecutors drew upon internal bank documents to help build a fraud case against an executive at Chinese telecommunications company Huawei Technologies Co. Huawei and the executive deny any wrongdoing.
Parts of HSBC’s business also have been under pressure from trade tensions between the U.S. and China, which has curbed trade and investment for some customers, albeit to a limited degree, according to the bank. Mr. Stevenson said a slowdown in global trade “will have an impact on the business,” and that consumer and business confidence in the U.K. has taken a knock from the U.K.’s pending exit from the European Union.
The bank said it will miss a target to make a 6% return on tangible equity in its U.S. business next year, because of adverse business conditions including U.S. interest rate cuts.
HSBC posted $4.37 billion in net profit for the second quarter, up from $4.1 billion in the prior-year quarter, on higher revenue.
Write to Margot Patrick at [email protected]
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