Europe’s biggest bank by assets, HSBC, is slashing 35,000 jobs and $100 billion in assets as it moves to streamline business functions in the U.S., mainland Europe and its investment bank, the Wall Street Journal (WSJ) reported on Tuesday (Feb. 18).
At the same time, HSBC is moving to grow profits by investing in Asia and the Middle East, both rapidly-growing regions. Although HSBC is in over 50 countries, 50 percent of its revenue comes from Asia.
Prices of HSBC’s London-listed shares opened 5.1 percent lower Tuesday (Feb. 18) and net profit slid 53 percent to $5.97 billion last year, including a “goodwill impairment” of $7.3 billion.
The 155-year-old financial institution, which employs 235,000 people, is going through an estimated $7.2 billion restructuring in the next few years. The reorganization is happening as the financial winds change course due to politics, economic uncertainty, U.S.-China trade tensions and Hong Kong demonstrations.
HSBC Chairman Mark Tucker said the bank is still dealing with “substantial challenges” in the U.K., Hong Kong and mainland China, all considered to be its primary market regions.
He added that the coronavirus outbreak has led to lowered expectations for economic expansion in Asia.
The bank’s interim head Noel Quinn — who replaced John Flint in August — is leading the restructuring. Quinn is a candidate for being named the permanent chief executive officer, which will be decided in 2020.
“Around 30 percent of our capital is currently allocated to businesses that are delivering returns below their cost of equity, largely in global banking and markets in Europe and the U.S.,” Quinn said.
HSBC will be “exiting businesses where necessary,” he added.
Ewen Stevenson, HSBC chief financial officer, said “meaningful job cuts” would take place in HSBC’s investment bank and London headquarters.
HSBC is joining Standard Chartered in giving billions of dollars in relief money to borrowers, as the coronavirus continues in its threat to throttle an already fragile economy.