HSBC To Cut 2000 Jobs In Commercial Bank Unit

HSBC is embarking on a round of thousands of job cuts at its commercial banking arm as executives accelerate efforts to bring down costs across its sprawling global empire.

Sky News has learnt that HSBC last week began the process of reducing headcount in the division, with the aim of cutting up to 2000 roles there over the next two years – including hundreds of UK-based positions.

The move is part of a much broader effort, signalled in June, that will see about 50,000 roles – or one-fifth of the workforce of Europe’s biggest lender – disappear by the end of 2017.

And it comes as banks including Credit Suisse (LSE: 0QP5.L - news) , Deutsche Bank (Other OTC: DBAGF - news) and Standard Chartered (HKSE: 2888.HK - news) launch renewed attempts to get costs under control by slashing London-based jobs.

In a statement issued to Sky News on Monday, an HSBC spokesman said:

"As flagged in our investor update we have targeted significant cost reductions by the end of 2017, and we continually review and manage our overall headcount requirements."

Around half of the 50,000 cuts will be accounted for by the sale of most of HSBC’s operations in Brazil and Turkey.

The former was offloaded for a better-than-expected $5.2bn in August, while the Turkish sale has encountered greater difficulty, with a deal to offload its business there to ING apparently collapsing several weeks ago.

At a strategy day in June, Stuart Gulliver, HSBC’s chief executive, did not provide a breakdown of where the rest of the job cuts would take place, although in the region of 7000-8000 are likely to fall in the UK.

News (Other OTC: NWSAL - news) of the 2000 job losses – some of which will come through attrition – comes as HSBC enters the latter stages of a review of whether to move its headquarters away from the UK.

Although a number of tax and regulatory measures appear to have shifted the momentum in favour of the bank remaining headquartered in its home market of the last 23 years, Mr Gulliver said recently that shareholders should not draw conclusions from his remark that some of his regulatory concerns had been satisfactorily addressed.

On Monday, David Cumming, head of equities at Standard Life Investments, said it would support HSBC’s board if it decided to move its headquarters overseas.

HSBC's share price performance, which has seen its stock trade down more than 15% in London in the last year, has been a source of frustration given the scale of restructuring already undertaken by Mr Gulliver since he took over in 2011.

The growing cost of regulation – as well as billions of pounds in fines for its involvement in a string of trading and mis-selling scandals – have been among the factors weighing on the bank’s shares.

George Osborne announced in his Budget after the General Election that the Bank Levy, which has hit HSBC punitively since it was introduced four years ago, would be restructured.

While HSBC's bill from the levy will reduce over time, its overall tax burden remains unclear because of a new Corporation Tax surcharge on bank profits that the Chancellor has also decided to implement.

HSBC last month announced a surge in quarterly profits, as a tighter grip on costs was aided by a reduction in misconduct-related charges.