HSBC to hit ‘pause’ on its retrenchment plan and will freeze hiring as coronavirus pandemic shows no sign of slowing

HSBC plans to delay thousands of job cuts planned as part of a massive restructuring announced in February because of the “extraordinary impact” of the coronavirus pandemic that has probably sent the global economy into a recession, according to an internal announcement.

The bank, one of three lenders authorised to issue currency in Hong Kong, told staff on Thursday it would “pause, for the time being, the vast majority of redundancies” that would have seen as many as 35,000 jobs being eliminated as part of an overhaul designed to reduce annual costs by US$4.5 billion, according to the memorandum seen by the South China Morning Post.

HSBC, which is based in London but generates most its revenue in Asia, also said it would freeze hiring except for a “small number of frontline and business-critical roles and those already with written offers.” A spokeswoman at HSBC confirmed the content of the memorandum.

“The measures we announced in February to transform the bank remain crucial,” HSBC’s chief executive Noel Quinn said in the internal announcement. “The decisions we are announcing today enable us to better support our people during the present uncertainty, while remaining focused on our ambition to transform the bank.”

Quinn, who took over from John Flint as interim CEO in August, was appointed to the top job permanently last week. The announcement comes just over a month after Quinn announced the third major overhaul for the lender in a decade.

As part of the overhaul, HSBC is making a bigger bet on rising incomes in mainland China and Asia, particularly in the Greater Bay Area. Quinn has said that the bank would shift capital from underperforming businesses in Europe and the US to growth markets, such as Hong Kong and mainland China.

The bank plans to shrink its investment bank in Europe and the US and cut its American retail branch network by 30 per cent as part of the reshaping.

The coronavirus pandemic has infected more than 468,000 people worldwide, forced some of the world’s biggest cities into lockdown and severely curtailed business activity around the globe.

Economists at Goldman Sachs and Morgan Stanley are among analysts that have said they believe the global economy is likely to have fallen into a recession as a result of the outbreak. More than three million people filed unemployment claims in the United States last week, an unprecedented amount as the health crisis has forced cities from New York to Los Angeles to order residents to stay at home to stem the spread.