HSBC Holdings Plc, a bank that earns most of its profits in Asia, is set to cut around 15 percent of its workforce, the London-based lender revealed in its 2019 financial report, in which the bank missed pre-tax profit expectations.
This Tuesday, the bank revealed that it had achieved a 2019 pre-tax profit to $13.35 billion, which is lower than the previous year by 33 percent after it took a goodwill impairment of $7.3 billion.
According to the report, the write-down was in relation to its European investment banking and commercial banking businesses. After the release, interim Chief Executive Noel Quinn told Reuters that it is planning a major overhaul, which will result in 35,000 job cuts over the next three years.
Coronavirus impact on HSBC
The London-based lender is not alone in cutting its staff, with many banks having to resort to job cuts in order to improve operations. HSBC’s problems, however, have been deepened recently by the Hong Kong protests and coronavirus.
When measuring the impact that coronavirus could have on its operations in 2020, Quinn said: “Since the start of January, the coronavirus outbreak has created significant disruption for our staff, suppliers, and customers, particularly in mainland China and Hong Kong.
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“Depending on how the situation develops, there is the potential for any associated economic slowdown to impact our expected credit losses in Hong Kong and mainland China.”
“Longer term, it is also possible that we may see revenue reductions from lower lending and transaction volumes, and further credit losses stemming from disruption to customer supply chains. We continue to monitor the situation closely.”
According to a report from Bloomberg, the cutbacks at the bank will also impact part of its European and US investment banking businesses, with a focus on fixed income. The London bank will also be reducing its retail network by 30 percent.
Commenting on the financial results for 2019, Noel Quinn, Group CEO, said in the statement: “The Group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns.”
“We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment, and build a platform for sustainable growth. We have already begun to implement this plan, which my management team and I are committed to executing at pace.”