HSBC will cut 30,000 jobs, or almost 10% of its workforce, by 2013 as it seeks to reduce costs by $3.5 billion, the bank announced today as it reported first half earnings .
Chief Executive Stuart Gulliver told journalists in London that the bank would shed 25,000 positions in addition to the 5,000 that had already been announced. The number far exceeds the 10,000 cuts that had been expected.
"If we're looking to take 10% out of the cost base of the firm," Gulliver said, "It's not altogether surprising that it's 10% of headcount."
It's possible that total headcount by the end of 2013 won't be reduced by 30,000 as the bank grows in places such as Europe and Latin America, the CEO said. The bank may hire between 3,000 and 4,000 employees in emerging markets, Gulliver said.
And, the bank may spin off some businesses, cutting its employment through divestitures. The 30,000 isn't a firm figure because the bank is working toward an "efficiency target," Gulliver said.
Yesterday, HSBC announced a plan to sell 195 U.S. branches, almost half of its branch network in the country, to First Niagara Financial Group for about $1 billion. Most of the 1,900 people who staff the branches are expected to keep their jobs, First Niagara said.
Of the 5,000 cuts already announced, 1,700 will take place in Latin America, 1,400 in the U.S., 700 in France, 700 in the U.K. and 300 in the Middle East. It wasn't immediately clear where the rest of the eliminations will be concentrated. The firm has already shut down its retail businesses in Russia and Poland.
The firm set aside $10.5 billion in compensation and benefits for the first half of 2011, up from $10 billion it set aside in the second half of 2010.
For the first half of 2011, HSBC saw revenue growth driven by commercial banking, where revenue was up 14% compared to the second half of 2010. Global banking and markets profits totaled $4.8 billion in the first half of 2011, down 12% from the year earlier period but up 28% from the second half of 2010.
Gulliver said the bank fared better than its competitors in global banking because there's much less proprietary trading, a small commodities desk, and the business is "rooted in a customer base where GDP growth is high."
Write to Julie Steinberg