HSBC Cuts Jobs, Sells 195 US Branches
HSBC announced on Monday its plans to cut 30,000 jobs worldwide by 2013 and sell about half the retail bank branches in the United States.
According to the bank, these cuts are part of a plan to grow its business in fast-emerging markets.
HSBC, who reported a three percent increase in pretax profits to $11.5 billion, up from the $11.1 billion a year ago, has already made 5,000 job cuts this year.
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Chief Executive Stuart Gulliver said in a conference call, “There will be further job cuts. There will be something like 25,000 roles eliminated between now and the end of 2013."
There are currently about 296,000 HSBC employees worldwide. These cuts would eliminate about ten percent of the bank’s total workforce.
HSBC plans to sell 195 retail banking branches in the U.S. for around $1 billion to First Niagara Bank. Many of the branches to be sold are located in upstate New York, six from Connecticut, four from northern Westchester County, and two in Putnam County.
The bank is still recovering from the share of bad loans in the U.S. from the 2003 acquisition of consumer lender Household International Inc. This gain made HSBC the biggest subprime lender in the United States in 2003 and resulted in the losses of billions to the British banking company building up to the 2008 financial crisis.
News of the bank’s overhaul and its profit caused an increase in HSBC’S share price. The bank’s share price rose 51 cents per share in the first half – up 38 cents from last year.
Gulliver said, "I am pleased with the results, which mark a first step in the right direction on what will be a long journey.”
According to Gulliver, the bank is talking with potential buyers for its credit card business in America. The New York Times reported that Capital One Financial is among the potential buyers.
Patrick Humphris, a bank spokesman, did not reveal where the job cuts would be, but said the banking company was hiring in Brazil and Mexico – countries with emerging markets.
Gulliver also said he expects the Asia-Pacific and other emerging markets to “remain positive.”
“Growth in the U.S. and Europe is likely to remain sluggish as long as the impact of high debt levels and government budget cuts weigh on economic activity,” he said.
