HSBC joined JPMorgan in eliminating thousands of jobs. The British bank is reportedly preparing to reduce its global workforce as part of its initiative to reassure shareholders that it is focused on reducing costs after suffering a series of scandals that damaged its reputation.
Last week, it was reported that JPMorgan Chase will cut 2% of its workforce or 5,000 jobs as part of its cost-cutting initiatives.
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HSBC to cut as much as 20,000 jobs by the end of 2017
According to Sky News, HSBC CEO Stuart Gulliver is revising the bank’s target job cuts, which will be implemented by the end of 2017. Gulliver is expected to announce the bank’s new target workforce reduction during an investor day on June 9.
People familiar with the matter suggested that HSBC will likely eliminate around 10,000 to 20,000 jobs. One of the sources said the British is still finalizing the details of the planned workforce reduction.
HSBC has 258,000 employees by the end of 2014.The British Bank already set a target to reduce the number of its workforce between 240,000 and 250,000 by 2016. That plan was abandoned two years ago because of the rapidly changing regulation in the banking industry.
HSBC’s new target workforce reduction does not include the potential impact of the sale of its operations in Brazil and Turkey, as well as the potential separation of its unit in United Kingdom. The British Bank engaged the services of Goldman Sachs to help look for potential buyers for its business in Brazil last April.
Last month, Gulliver indicated the separation of HSBC’s unit in United Kingdom is possible because British lenders are required to create separate ring-fenced entities by 2019.
A separate report from Daily Mail indicated that HSBC will eliminate 4,000 jobs in the United Kingdom and transfer those jobs in Asia particularly in China, India, and Malaysia.
Bill Dalton, chief executive of HSBC’s retail bank in UK was quoted saying that the job cuts were “essential to HSBC’s continued success. HSBC has a responsibility to all its stakeholders to remain efficient and competitive. This is the best, indeed, the only way, of ensuring job security for our staff worldwide.”
UK’s bank levy made HSBC less attractive
The British government increased the bank levy, an annual tax on the value of all the debts in UK banks to 0.21% from 0.156% this year. Chancellor George Osborne said the increase will bring “additional £900m a year” to the government’s budget.
Some analysts believed that the bank levy was applied disproportionately to lenders based in the United Kingdom. The bank levy also made HSBC less attractive because it decreased Gulliver’s ability to increase the bank’s dividend.
The British Banker Association (BBA) said the increase in bank levy “deterred international banks from investing in the UK.” Its CEO Anthony Browne commented, ” “This [levy increase] will also further disadvantage UK-headquartered banks by increasing tax on their overseas activities, while their competitors in those markets do not pay this tax at all.”