HSBC has unveiled plans to cut staffing costs by 8% in a push to save $1.5 billion, with thousands of UK employees expected to bear the brunt of the losses.
Georges Elhedery, the bank’s chief executive, announced that while HSBC’s 211,000-strong headcount will shrink by less than 8%, the overhaul will nonetheless involve significant job cuts and additional expenses of around $1.8 billion in severance and restructuring charges.
The move follows a series of corporate changes at the Asia-focused lender, including the merger of its wholesale businesses and a decision to pare back the underperforming investment bank. HSBC has also closed Zing, a digital payments venture, after just one year, as Elhedery focuses on cutting duplication and shifting resources to higher-growth areas, such as wealth management in Asia.
Alongside the restructuring, HSBC reported a 6.5% jump in annual profits to a record $32.3 billion, beating analysts’ forecasts. The FTSE 100 giant confirmed a fresh $2 billion share buyback and declared a quarterly dividend of 36 cents per share, returning a further $6.4 billion to investors.
The staff bonus pool inched higher to $3.8 billion from $3.77 billion, despite the headcount reductions. Meanwhile, HSBC plans to lift Elhedery’s potential pay package, which could reach £15.3 million this year, or up to £19.8 million if the bank’s share price rises by 50%.
In a separate announcement, the bank postponed its target date for achieving net-zero emissions from its own operations and supply chain from 2030 to 2050. The move comes as HSBC also launches a review of its 2030 goals for financed emissions — the carbon footprint of companies it lends to.
Elhedery said suppliers have lagged in their own sustainability efforts, making it harder for HSBC to meet near-term targets. The decision follows US banking giants withdrawing from the Net Zero Banking Alliance amid a domestic backlash, prompting questions about the global banking sector’s dedication to climate pledges.
Environmental, social and governance (ESG) metrics in Elhedery’s performance-based awards are being scaled back from 25% to 20%, to allow a higher weighting on what the bank calls “value creation”. Critics, however, see this as evidence that HSBC is easing off stringent climate targets in response to market pressure.
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HSBC slashes costs by 8% in $1.5bn drive as it scales back net-zero pledges