HSBC, Europe’s largest lender has decided to impose ban on hiring and pay freeze across the bank globally in 2016. This move is part of the bank’s plan of cost-cutting drive to boost profitability and returns to shareholders, and is pushing through with plans for annual cost savings of up to $5 billion in 2017. An email was send to HSBC employees on Friday detailing the cost-saving measures, according to sources who spoke on conditions of anonymity to an international news agency.
In June 2015, the bank had said it is planning to cut nearly one in five jobs and reduce its investment bank by a third due to slow economic growth and tighter global regulation of bank balance sheet risk. The bank was put under formal investigation last year on suspicions that the parent did not exercise sufficient controls on the activities of its Swiss private bank in 2006 and 2007. On Monday, HSBC has lost its appeal against the launch of a formal investigation in France into allegations it helped customers dodge tax. HSBC has admitted failings in controls at the Swiss private bank, but denied knowledge of wrongdoing. "We are disappointed with the outcome of this procedural appeal. We will continue to defend ourselves vigorously," the bank said in an emailed statement. Magistrates had previously estimated the Swiss arm's alleged fraud at around Euro 2.2 billion (£1.66 billion).
News of the pay and hiring freeze follows a significant week for HSBC, after its board met last week to consider moving headquarters to Hong Kong and to focus on the bank's strategy.