News of the planned cuts came this morning as the banking giant reported its first-half results, the highlight of which was an $11.5bn pre-tax profit, a 3% gain on the same period a year earlier. It also followed an earlier announcement of plans to cut 5,000 jobs, 700 of which were reported to be expected to come from the UK.
HSBC’s plans to pull out of 20 countries and cut an additional 25,000 jobs were not contained in the bank’s 49-page interim results statement, but were revealed in a conference call this morning with reporters by group chief executive Stuart Gulliver, who succeeded Michael Geogegan as CEO in January.
Gulliver referred to earlier comments he made in May, in which he said the bank would re-evaluate its presence in markets in which it did not have a dominant presence.
He did not, however, today name any of the 20 countries that were being considered for exit, beyond Russia — where HSBC some weeks ago said it was planning to leave — and Poland, the retail businesses of which it said last Friday it was getting out of. Currently HSBC is in 86 countries, an HSBC spokesman said.
In today’s statement, HSBC noted it was also getting out of three insurance businesses which were not named, and selling 195 "non-strategic" US branches, "principally in upstate New York".
The branches are being sold to First Niagara Bank for about $1bn, the statement said.
Gulliver pointed out that the 25,000 jobs to be lost by 2013 would come from a global workforce of 300,000, which has an average attrition rate each year of 10%, or around 30,000.
In an explanation of its strategy contained in today’s report, HSBC said it was targeting $2.5bn to $3.5bn in "sustainable cost savings" by 2013, and added: "Since the start of 2011, we have begun operational restructurings in Latin America, the US, the UK, France and the Middle East which will reduce headcount by around 5,000. We launched a programme to reduce the costs of our head office and global support functions.
"We also initiated more efficient business operating models for Commercial Banking and Retail Banking and Wealth Management."
Outlook
Assessing the outlook for key markets going forward, HSBC group chairman Douglas Flint noted that regulatory reforms globally were continuing to increase "at the same time as the global economy appears to be losing momentunm in its recovery".
"We are concerned about the possible pro-cyclical impoacts of further deleveraging of the global economy arising from the regulatory reform agenda, at the same time as sovereign credit concerns and fiscal consolidation challenges become more critical," he adde.
"Financial markets globally will likely be volatile over the rest of this year and into 2012, as participants assess and react to the possibility of political constraints preventing timely or optimal economic decisions."
On a more positive note, the results statement showed HSBC had returned a profit in all of the regions in which it operates.
To view the 49-page report, click here.
