HSBC said it would cut up to 8,000 British jobs and rebrand its UK retail banking unit, which it could sell in response to new rules stating such businesses must be separate from investment banking in order to protect customers.
HSBC CEO Stuart Gulliver said on Tuesday that between 7,000 and 8,000 jobs, or about one in six of its staff, would be cut by “natural attrition.” He said staff turnover in the business was about 3,000 a year.
Industry sources have said the business, which is being relocated to Birmingham, central England, could be re-branded under the Midland banner and spun off.
Gulliver said the group could not make a decision on whether to keep the business until it knew whether regulators would allow HSBC to continue to have a say in its future strategy, such as dividend policy.
Britain’s financial regulator is continuing to consult with banks about the changes. Its rules requiring banks to separate their retail operations from riskier investment activities are due to be implemented on Jan. 1, 2019.
“We will need to see how the PRA (Prudential Regulation Authority) looks at the implementation of the legislation,” Gulliver told investors in a strategy update.
“The question for us will be around our ability to control the dividend coming from the ring-fenced bank and to make sure that the strategy of the ring-fenced bank is complimentary to the strategy of the group,” he said.
HSBC, whose other brands include First Direct and M&S Bank, said in March that it would base its British retail and commercial banking business in Birmingham in central England.
The group’s British roots stem from that city after it bought Midland Bank in 1992 and subsequently moved headquarters to London from Hong Kong in 1993.
Gulliver said the bank would consult with staff and customers over the next few months on the future name of the business. Midland has been seen as a front-runner, according to industry sources.
“We will operate with a different brand name. We haven’t decided what that brand name will be and we’re going to consult customers and our own staff over the next few months to decide what we might call this bank,” Gulliver said.
HSBC also set out 11 criteria it will use to evaluate whether to move its headquarters out of London to Asia, likely Hong Kong.
London mayor Boris Johnson urged the bank not to move.
“This is why I urge people not to bash banks. They are huge employers in our city,” he said on LBC radio.