HSBC will resume slashing 35000 jobs and undergo restructuring due to the impact of the coronavirus crisis on its operations.
The pandemic made the planned overhaul more urgent. According to Noel Quinn, chief executive officer of HSBC, the company has to "lift the pause" on job losses and narrow its global headcount by 15% to 200,000 over the next three years.
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"You will have seen that our profits fell in the first quarter, and virtually all economic forecasts point to challenging times ahead," Quinn said in the letter.
"The reality is that the measures and the change we announced in February are even more necessary today. We could not pause the job losses indefinitely," he wrote in the letter, which was reported by Reuters and shared with CNN Business.
HSBC said it temporarily suspended most layoffs in March to relax the uncertainty for employees and keep its capacity to respond to customers intact. However, Quinn pointed out that the bank now needs to "look to the long-term" and carry on with its transformation program and reduce costs.
"When making decisions about redundancies we will proceed thoughtfully and consider local circumstances. We will aim to redeploy colleagues where we can," he added.
The company announced it will "make every effort" to hire internal candidates for the open positions.
Restructuring
The coronavirus crisis has intensified the challenges that HSBC is facing. With this, the bank will go through one of the deepest restructuring programs in its history. The bank's pretax profit dropped by 48% to $3.2 billion in the first quarter, compared to a year earlier. It allocated billions of dollars to manage credit losses emerging from the pandemic.
The bank is also facing pressure in Hong Kong, where it earned more than half its profit in 2019. It received criticism this month from US government officials and Britain after its top executive in Asia announced the bank's support for the national security law that Beijing imposed in Hong Kong.
Moreover, HSBC's support for the law does not completely promise a great reaction from Beijing, and this raised concerns over the bank's prospects in China.
HSBC's restructuring covers shifting resources away from the US and Europe to the Middle East and Asia, where most of its profits come from.The bank plans to ditch $100 billion in assets by the end of 2022, close its investment bank and shut down a third of its US branches.
Quinn said that the company could not provide a "unified timetable" for job cuts, but that notice periods in different markets mean that most workers will be either employed or paid for much of the rest of the year. "Everyone who leaves will be offered support on searching and applying for jobs and preparing for interview," he said.
Financial standing
In April, HSBC said it expected the first quarter credit losses to reach $3 billion last quarter partly due to the coronavirus as well as the ongoing decline in oil prices.
In a statement, the company said: “The outlook for world economies in 2020 has substantially worsened in the past two months.”
Quinn previously said that “The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year. We continue to press forward with the other areas of our transformation.”
