HSBC likely to cut 14,000 more jobs

May 18 2013, 10:13 IST
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SummaryHSBC will redouble cost-cutting efforts, including axing up to 14,000 more jobs, but Europe’s largest bank was forced to soften a key performance target in the face of muted revenue.

HSBC will redouble cost-cutting efforts, including axing up to 14,000 more jobs, but Europe’s largest bank was forced to soften a key performance target in the face of muted revenue.

London-headquartered HSBC is seeking up to $3 billion in additional annual savings by 2016, on top of $4 billion already achieved, but sluggish growth outside Asia, particularly in Europe, means its target to get costs below 52 per cent of revenue has been eased.

The new goal is to keep the ratio near 55 per cent, the level it was at in 2010 — the year before chief executive Stuart Gulliver took over and kickstarted a radical retrenchment at a bank that was criticised in the past for “planting flags” around the world. “We’re clearly hitting on the costs, but we’re missing on the cost efficiency ratio because of revenue, which is hard for us to control,” Gulliver told reporters. “Top line growth is clearly a challenge.”

He added: “We need to have a cost-efficiency target that’s realistic, so we’re saying take a look at our peer group, they are all in the high 50s or low 60s, whether it’s JPMorgan, Citi, Standard Chartered or Barclays.”

HSBC had a cost efficiency ratio of 63 per cent last year, which improved to 53 per cent in the first quarter. Banks do not release comparable data, but last year JPMorgan’s expenses were 67 per cent of revenue, at Citi it was 65 per cent, Barclays had an adjusted cost/income ratio of 64 per cent and Standard Chartered’s normalised cost/income ratio was 54 per cent.

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