Daily Management Review

HSBC Sends Out Memo On Resuming ‘Redundancy Plan’ Post COVID-19 Crisis


The cost restructuring plan of HSBC was put on hold due to the global outbreak of COVId-19 pandemic. Now that profits slouches which difficult economic forecasts ahead, the bank decides to fall back on its initial plan to cut over thirty thousand jobs.

HSBC has made up its mind about resuming on its “redundancy plan” which it had held back due to the outbreak of COVID-19 pandemic. Likewise, the bank will be slashing nearly “35,000 jobs” by the “medium term”, reported Reuters as per a memo which was seen by the agency on Wednesday, June 17, 2020.
Moreover, the chief executive of HSBC, Noel Quinn informed in the memo that the bank is to remain frozen on “almost all” recruitments from the outside. The said memo was sent to the entire staff of HSBC globally which amounts to the strength of “235,000”. Since, the first measures were announced February, Quinn remarked that taking this step becomes “even more necessary today”. In his words:
“We could not pause the job losses indefinitely - it was always a question of ‘not if, but when’.”
Reuters received a confirmation from one of the spokespersons of HSBC about the above mentioned memo. The job cut plan that has been postponed formed part of a “wider restructuring” in a bid to reduce “$4.5 billion in costs”. In the month of March 2020, due to the pandemic outbreak which created extraordinary situation, the bank decided that “it would be wrong to push staff out”.
However, at present, Quinn pointed out, the bank has to resume the restructuring plan while profits are collapsing and forecasts point to a challenging economic landscape in the near future. Quinn has urged the senior executive members to identify areas which could allow the institution to cut further costs in the later last of 2020.
According to Reuters:
“The bulk of the job losses are likely to fall in back office roles in HSBC’s Global Banking and Markets division, which houses its investment banking and trading businesses, a senior HSBC executive familiar with the plans said”.
In a “natural attrition”, HSBC counts up to “25,000 roles” annually, while the executives found that redeployment of “affected staff to those roles was unrealistic”. Ever since the beginning of March 2020, HSBC witnessed a twenty seven percent drop in its share while due to the pandemic, the bank was prompted to put aside “$3 billion in bad loan provisions in its first quarter earnings”.
As per the initial plan of HSBC, it would club together its wealth business and private banking, while reducing the “equity business” of Europe  and the “retail network” of the U.S.