HSBC announced it will cut 3,000 jobs in support functions at its Asian headquarters in Hong Kong over the next three years, as part of a global cost-cutting plan. Last month, Chief Executive Stuart Gulliver said he was planning to axe 30,000 jobs globally by the end of 2013. Most of the job losses announced are expected to be in Europe and North America, however, Asia is also set to suffer.
Several other major banks have announced cost-cutting measures due to a slowdown in the sector and tougher regulation.
HSBC said the cuts were aimed at streamlining operations. Peter Wong, HSBC?Asia Pacific chief executive, said in a memo some workers would be redeployed but that “jobs will be eliminated”.
HSBC was founded in Hong Kong and is one of the biggest employers in the world. Analysts say the large cuts could be seen as a blow to Hong Kong because the bank is also one of the city’s biggest corporation and employs thousands of people.
Frances Cheung, Credit Agricole CIB senior strategist, said, “This is a significant number of cuts, and will definitely put pressure on the local labor market,” while warning that “the move could spur other firms to follow suit.”
Hong Kong’s unemployment rate fell to 3.4% in the May-July period from 3.5% in April-June but economists said it could rise in the last quarter because of global uncertainty.
Recently, HSBC has shifted their focus towards fast-growing Asian countries. The headquarters were moved to Hong Kong two years ago. The bank also said it planned to hire at least 2,000 people in mainland China and Singapore over the next five years and that 3,000 to 5,000 jobs would be added each year in Asia.
Banks have been ramping up in Asia across recent years tapping into the region’s economic growth. To date, Asia-based bankers were widely seen as relatively safe compared with other global banks.
Banks with Asian operations have profited by catering to Asian corporates that aim to expand in the aftermath of the global financial crisis. However, Asia is unlikely to be spared from global cutbacks by banks. Amid recession, banks are tightening their belts to save themselves from a financial collapse.
Last month, UBS AG declared it would lay off more than 5% of its work force, as the Swiss bank faces weaker earnings, tougher regulation, and a surging franc. Bank of America also announced 30,000 job cuts yesterday.?The cuts represent about 10% of the company’s workforce. The leading American?bank says it wants to save about $5bn a year as it recovers from the sub-prime mortgage crisis.
Credit Suisse Group (CS) says it plans to cut 4% of its work force to reduce spending after disappointing second-quarter results.
Sources: BBC, WSJ