Free Press Journal

HSBC to slash 25,000 jobs as it shifts focus back to Asian roots


Pedestrians walk past HSBC signage outside the bank's Indian head office in Mumbai on August 2, 2011. Global banking giant HSBC will hire up to 15,000 people in emerging markets over the next three years, a spokeswoman said August 2, a day after it announced plans to slash 30,000 jobs worldwide. AFP PHOTO/Indranil MUKHERJEE

The impact of the global exercise is expected to be minimal for its Indian operations where it currently employs 32,000 people 

Mumbai : HSBC Holdings, which has operations in over 70 countries and around 51 million customers, said it intends to sell its operations in Turkey and Brazil, a move that will see its workforce reduce by around another 25,000 to reduce costs and shift its center of gravity back toward the fast-growing Asian economies where it started operations 150 years ago.

However, the impact of the global exercise is expected to be minimal for its operations here and some surprise benefits may also come in.  “It is too early to speak of the impact (of the global cost cutting measures). If anything, it will be minimal in nature here. It could also be positive as Asia has been identified as a focus market and moreover India is a priority market for us,” an HSBC India official told PTI.

Overall, Europe’s largest bank by market value aims to cut costs by USD 4.5 billion to USD 5.0 billion by the end of 2017 and reduce the number of full-time employees by around 10%, equivalent to between 22,000 and 25,000.

A large chunk of those lost jobs will be in Britain, where up to 8,000 jobs could go. The bank hopes many of the cuts will come from attrition, by not filling posts that are vacated.

The bank in an investor presentation said that it will increase software engineering carried out in India and China to 75% by 2017 from the present 50%, which could help it save up to USD 525 million.

According to estimates, out of the 32,000 employees of HSBC in India, as many as over 27,000 are employed in the back offices and development centres spread across Pune, Hyderabad, Vishakapatnam, Kolkata, Bangalore and Delhi. It has another 5,000 employees in the banking, asset management and insurance space in the country.

The bank said it will cut the staffing in investment banking by a third in this effort to improve efficiencies, which is aimed at cutting costs by up to USD 5 billion by 2017.

According to the official, the bank employs only under 20 in the equity capital markets and i-banking divisions and an equal number at its debt capital markets division in the country. In fact, last year the bank added as many as 1,000 heads here to 32,000, which was the second highest after England.

“Asia is expected to show high growth and become the centre of global trade over the next decade. We recognise that the world has changed and we need to change with it,” group chief executive Stuart Gulliver said. In an investor presentation, the bank identified India among focus areas where it intends to grow, along with others countries like Australia, Canada, Egypt and Taiwan.

As well as having an already sizeable presence across Asia, HSBC has historic ties to the region. It was founded in Hong Kong in 1865 when the city was a British colony in order to finance growing trade between China and Europe, much of it involving opium. Its original name, later shortened to HSBC, says it all: The Hongkong and Shanghai Banking Corporation.

A top union official in Britain said the expected job cuts represented the latest example of a workforce being punished for the misconduct of others, notably those in senior management and investment banking. HSBC has paid billions in fines globally to settle investigations of market rigging and allegations it helped clients evade taxes and launder money.

“After all the scandals of recent years, front-line staff have suffered time and time again as they are forced to pay for the mistakes of others with their jobs, their terms and conditions and their reputation,” said Dominic Hook of Unite union.

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