HSBC may cut 14,000 more jobs as revenue faces pressure
By Lawrence White and Steve Slater
HONG KONG/LONDON (Reuters) - HSBC (HSBA.L: Quote) will redouble cost-cutting efforts, including axing up to 14,000 more jobs, but Europe's largest bank was forced to soften a key performance target in the face of muted revenue.
London-headquartered HSBC 0005.HK is seeking up to $3 billion in additional annual savings by 2016, on top of $4 billion already achieved, but sluggish growth outside Asia, particularly in Europe, means its target to get costs below 52 percent of revenue has been eased.
The new goal is to keep the ratio near 55 percent, the level it was at in 2010 - the year before Chief Executive Stuart Gulliver took over and kickstarted a radical retrenchment at a bank that was criticized in the past for "planting flags" around the world.
"We're clearly hitting on the costs, but we're missing on the cost efficiency ratio because of revenue, which is hard for us to control," Gulliver told reporters. "Top line growth is clearly a challenge."
He added: "We need to have a cost-efficiency target that's realistic, so we're saying take a look at our peer group, they are all in the high 50s or low 60s, whether it's JPMorgan (JPM.N: Quote), Citi (C.N: Quote), Standard Chartered (STAN.L: Quote) or Barclays (BARC.L: Quote)."
HSBC had a cost efficiency ratio of 63 percent last year, which improved to 53 percent in the first quarter. Banks do not release comparable data, but last year JPMorgan's expenses were 67 percent of revenue, at Citi it was 65 percent, Barclays had an adjusted cost/income ratio of 64 percent and Standard Chartered's normalized cost/income ratio was 54 percent.
Gulliver, former head of HSBC's investment bank, has already cut 46,000 jobs and sold or closed 52 businesses, including a minority stake in Chinese insurer Ping An 2318.HK and its U.S. credit cards.
Such deals have reduced its risk-weighted assets by $95 billion and produced gains totaling about $8 billion. Continued...