HSBC to Cut 50,000 Jobs in Quest for Higher Dividends
HSBC Holdings plc (NYSE/HSBC) announces that it would reduce its head count by up to 50,000 as part of a global overhaul to improve the profitability of its sprawling operations.
HSBC was founded in 1865 to finance trade between Asia and the West. Today, HSBC is one of the world’s largest banking and financial service organizations, serving some 51 million customers. Headquartered in London, HSBC operates through long-established businesses and an international network of more than 6,100 offices in 73 countries and territories. (Source: HSBC , last accessed June 9, 2015.)
HSBC’s Growth Plan
HSBC intends to sell its operations in Turkey and Brazil, but plans to maintain a presence in Brazil to serve large corporate clients with respect to their international needs. (Source: HSBC, June 9, 2015.)
The bank said that it would concentrate its business operations on Asia and try to reduce its cost to $5.0 billion annually by 2017, laying off as many as 25,000 staff. HSBC has plans to develop its business in both the Pearl River Delta in Guangdong province, China, and in the Association of Southeast Asian Nations (ASEAN) region.
HSBC also plans to set up UK Ring-Fenced Bank, as the HSBC name disappeared from Britain’s streets more than 20 years after the bank acquired Midland Bank. HSBC also said that by the end of the year it would complete a review of the possibility of relocating its headquarters away from London.
The bank also said it would monitor its activities in the United States and Mexico to turn around its business operations.
Also Read: HSBC PMI (Purchasing Managers’ Index) 49.2 in May
The bank has decided to lower its target for return on equity to greater than 10% by 2017, down from a previous target of 12 to 15% by 2016. Following the news, HSBC shares declined by roughly one percent in morning trading.
Stuart Gulliver, Group Chief Executive stated, “HSBC has an unrivalled global position: access to high growth markets; a diversified universal banking model with strong funding and a low risk profile; and strong internal capital generation with industry-leading dividends.”
