The layoffs were originally slated to start back in February, but HSBC placed the layoffs on hold during the Covid-19 pandemic. In light of the current challenging business climate, coupled with falling profits, the bank claims that it has to act now to rein in costs. HSBC will also enact a firm-wide hiring freeze.
Noel Quinn, the bank’s Chief Executive Officer, sent a memo to his 235,000 employees writing, “We could not pause the job losses indefinitely—it was always a question of ‘not if, but when.’”
Quinn further stated, "You will have seen that our profits fell in the first quarter, and virtually all economic forecasts point to challenging times ahead."
The CEO added that the layoffs, which were first planned for February, are “even more necessary today.” “Since February, we have pressed forward with some aspects of our transformation program, but we now need to look to the long term and move ahead with others, including reducing our costs,” said Quinn.
The bank has faced serious headwinds. Its pre-tax profit plunged 48 percent to $3.2 Bn in the first quarter and it had to set aside billions of dollars for potential losses associated with the Covid-19 pandemic.
The move is part of a restructuring program that aims to achieve $4.5 Bn of cost cuts by 2022.
Some cuts are likely to come from merging support roles in commercial banks and investment banks. The bank will also review less-profitable areas of business.