HSBC Layoffs 2019: 4,000 Lose Jobs After CEO's Exit

HSBC Bank, Europe’s largest bank in terms of assets has announced cutting 4,000 jobs to reduce costs.

The decision of layoff follows immediately after the abrupt departure of CEO John Flint who resigned after 18 months into office.

Headquartered in London, HSBC draws much of its revenue from Asia, mainly Hong Kong and Greater China. The bank has 237,685 employees.

HSBC Group Chief Financial Officer Ewen Stevenson told the Wall Street Journal that the job cuts will be confined to senior roles and save 4 percent of the bank’s wage costs.

CEO’s abrupt exit

Flint’s exit had made some hot banking news. The bank said Flint stepped down under a mutual agreement and Noel Quinn, the chief executive of global commercial banking, will officiate as the interim CEO until there is a permanent replacement.

HSBC shares had been down 14 percent since Flint took over compared with a marginal 1 percent drop in the FTSE 100 Index.

Chairman Mark Tucker said a change in leadership was necessary and the bank is strong on the strategy side.

“In the complex global environment, the board believes a change is needed to capture the significant opportunities before us,” Tucker said.

Business concerns over the trade war and Brexit

In the Q2 results on Monday, the bank had reported a jump in profits of $4.4 billion, which was 7 percent more than the same period last year.

“Trade tensions between the U.S. and China are progressively affecting the growth output in both markets,” Chief Financial Officer Ewen Stevenson told investors.

On the current environment including the U.S. trade war with China, HSBC said: “the outlook has changed and the U.S. interest rates are now expected to fall rather than rise and geopolitical issues could impact a significant number of our major markets.”

Brexit uncertainties are also affecting its outlook. Britain is expected to leave the European Union on Oct. 31.

HSBC is considered a conservative bank and prefers not to stray beyond investment banking. It makes its money from the giant trade flows between Asia and the West.

HSBC wants to boost earnings by expanding the focus on fast-growing Asian economies.

Is there a Huawei connection?

However, some observers also say the Huawei connection behind the shuffle cannot be dismissed.

To stay in the good books of the U.S, authorities HSBC might have provided the information that allowed America to apply for the extradition of Meng Wanzhou, Huawei's chief financial officer.

This could have irked Beijing, and HSBC wants China's goodwill as well. So, Flint became an object of sacrifice.

Commenting on the leadership change and job cuts, an analyst called it a reformist step.

“With macroeconomic and geopolitical headwinds mounting, the HSBC board could be looking for more radical reform,” Nicholas Hyett, an analyst at Hargreaves Lansdown said.