HSBC confident that growth lies in Asia
- HSBC is expected to axe thousands of jobs worldwide but continue to hire in Asia, a move that points to the bank’s confidence in the region, especially China
HSBC is expected to axe thousands of jobs worldwide, but will continue to hire in Asia. The latest cost-cutting is expected to affect up to 10,000 employees on top of about 4,700 redundancies previously announced. It is part of a global trend in the banking sector, which is facing a low-to-negative interest rate environment and falling investment revenues. But it also points to the bank’s confidence in the growth potential of Asia, especially China.
The region already accounts for nearly 80 per cent of HSBC’s gross profits. The programme is a signature move by interim chief executive Noel Quinn after the short but contentious tenure of HSBC veteran John Flint. Quinn is thought to be the likeliest contender for the top post on a permanent basis, although a global job search is still ongoing.
The new redundancy exercise will target mostly high-paying positions with those in Europe especially affected. Rivals such as Barclays, Citigroup, Deutsche Bank, Nomura Holdings and Société Générale have all slashed their payrolls. However, HSBC’s move is also seen as part of a multi-year corrective to shrink its worldwide footprint and pivot to Asia following the global financial crisis.
Hong Kong has traditionally been among the bank’s most profitable centres. But even before the 1997 handover, HSBC started aiming to be a global bank. Styling itself as “the world’s local bank”, it made ill-fated forays into multiple Western markets, especially in the United States. The bank’s stock was once the favourite of Hong Kong’s retail investors. But prices have been halved and stuck in the doldrums since the crisis broke out more than a decade ago. For its long-suffering shareholders, the refocus to Asia is no doubt welcome but is taking too long. Many, not unreasonably, wonder when they will see the results.
Quinn will have much to prove – and not much time to do it – in a difficult macroeconomic environment that includes the trade war between China and the United States, Brexit and the slowdown of the world economy. But the bank is still in a hiring mode when it comes to Asia. That is a belated recognition that the region remains where the best growth is likely in coming years.