Newly confirmed HSBC group chief executive Noel Quinn has barely enough time to celebrate as he grapples with how to cut 35,000 jobs in the midst of a coronavirus pandemic that has claimed nearly 9,000 lives.
Cutting jobs in the middle of a global health crisis has more than just economic effects – there are also social and political ones. Depending on the location and segment, a mistimed axing – more so given that authorities are rushing to provide monetary and fiscal support sometimes targeting the working class – could result in varying levels of internal and external backlash.
HSBC’s Quinn faces an uphill battle as the effects of the coronavirus pandemic threaten to slow down the British bank’s cost-cutting plans.
One of the key elements of the revamp involves the reduction of physical branches with a focus on the U.S. and the U.K. where coronavirus cases are ramping up. In addition to the obvious social risks linked to a current wholesale layoff of branch employees, HSBC also faces logistical hurdles when unwinding branches.
In the U.K. where the bank is looking to cut 27 more branches this year, it has already had to shut down two locations temporarily – Burnley and Northampton – due to confirmed cases of staff infection. And in the U.S., where HSBC said it would cut one-third or about 80 branches, competitors are already taking major precautions including JPMorgan Chase which will reportedly close around 20 percent of its branches.
Interestingly, Quinn had previously said that the group considered a full exit from the U.S. retail market but opted, in the end, to keep the business as a key source of dollar liquidity and funding for the group.
Layoffs in the broader workforce will also be more difficult to execute until the effects of the outbreak are better contained. In addition to temporarily closed branches, at least two staff at HSBC – one in London and one in Dubai – have already been diagnosed with Covid-19 and staff within the vicinity have been told to work from home to slow down any potential contagion.
You can’t fire a trader in Europe over the phone when he is either working from home or taking care of a sick family member, said a report citing an unnamed HSBC source.
Although not alone in facing job cut headwinds, HSBC accounts for a dominant share (46 percent) of the 75,700 job cuts disclosed by banks worldwide as of December 2019. But still, it remains confident about the longer-term prospects most notably in Asia where it is betting on China’s wealthy to boost profitability. HSBC’s Asia private banking head Tan Siew Meng recently earmarked a three-year timeline to triple its number of Greater China billionaire clients.
We have a history of staying calm in difficult times, dealing with the issues at hand, and standing firm for our customers, said the newly appointed CEO Quinn in an internal e-mail. We must do the same again.
A spokesperson for the bank said no changes had been made to its plans since the last announcement in February.
