HSBC to cut 30,000 jobs in global overhaul
Published 2:19 pm Monday, August 1, 2011
LONDON (AP) — British banking group HSBC said Monday it will cut 30,000 jobs worldwide by 2013 and sell almost half its retail bank branches in the U.S., part of a new strategy to focus on fast-growing emerging markets.
The bank, which reported a better-than-expected 3 percent increase in pretax profits to $11.5 billion in the six months to June, has already shed 5,000 jobs this year. Another 25,000 will be cut by 2013, spokesman Patrick Humphris said.
HSBC currently employs around 296,000 people worldwide.
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Humphris declined to give details of where the job cuts would be but said the group is still hiring in emerging economies such as Brazil and Mexico.
The move echoes similar announcements by other global banks, such as Credit Suisse, UBS and Goldman Sachs, which in recent weeks said they needed to trim payrolls to adjust to tougher market conditions.
As part of its restructuring, HSBC will sell 195 retail banking branches in the United States to First Niagara Bank for around $1 billion. Most of the branches to be sold are in upstate New York, while six are in Connecticut. Four more are in northern Westchester County, and two in Putnam County.
The bank is still dealing with the legacy of bad loans in the U.S. from the 2003 acquisition of consumer lender Household International Inc. The acquisition made HSBC the biggest subprime lender in the United States at the time, which resulted in billions of losses to HSBC leading up to the financial crisis of 2008.
“I am pleased with the results, which mark a first step in the right direction on what will be a long journey,” new chief executive Stuart Gulliver said in a statement.
News of the bank’s overhaul and its profit — earnings per share rose to 51 cents in the first half from 38 cents a year earlier, allowing for a 12.5 percent dividend increase to 18 cents — boosted the company’s share price.
Shares in HSBC Holdings PLC closed 2.2 percent higher at 607.5 pence (99 cents), after jumping as much as 5 percent earlier in the session.
Seymour Pierce analyst Bruce Packard said the pretax profit figures were about 6 percent higher than forecast.
“These results look better than expected, underlining the attractions of HSBC’s conservative balance sheet and developing markets business,” he said.
Gulliver said in a statement that he expects financial markets worldwide to remain volatile this year and in 2012. He predicted growth in the U.S. and Europe would remain sluggish, weighed down by high debt levels and government budget cuts, but that Asia-Pacific and Latin American would continue to grow.