SHRINK TO GROW

Big British banks are competing to see who can cut the most jobs

Obsession
Future of Finance
Obsession
Future of Finance

You call those job cuts? These are job cuts.

A few months ago, RBS announced a plan to cut a whopping 14,000 jobs, the equivalent of shuttering a decent-sized multinational company. Today, HSBC upped the ante considerably—it unveiled an aggressive new cost-cutting plan that features up to 25,000 job cuts by 2017. The ranks of the soon-to-be-unemployed staff at HSBC could form a new company the size of Bristol-Meyers Squibb or Time Warner Inc.

The cuts will come as part of a drive to save some $5 billion in costs over the next two years. Part of this push includes selling the bank’s operations in Turkey and Brazil, which will move another 25,000 jobs off of HSBC’s books. For those keeping score, between 2010 and 2017, HSBC’s headcount will shrink by nearly 100,000, or 30%.

At just over 200,000 employees in 73 countries, HSBC a few years from now won’t exactly be transformed into a small, sleepy lender. Indeed, chief executive Stuart Gulliver’s admission earlier this year that the bank is essentially too big to manage remains valid. “Slaughtering the staff is not necessarily the solution unless management makes the bank considerably less complex,” an analyst told Reuters.

Like other banking conglomerates, HSBC’s deepest cuts will come at its riskiest operations, namely investment banking. By 2017, HSBC’s investment bank will shed $140 billion in risk-weighted assets, trimming the unit to less than one-third of the group’s total. That at least reduces the size of the business most at fault for some of the bank’s costliest legal missteps in recent years. HSBC also divulged a few more details (pdf, p. 44) about how it will decide whether to move its headquarters away from London at the end of the year, ostensibly to further reduce costs and avoid bothersome regulatory entanglements.

Despite all the drastic numbers, markets aren’t convinced by the overhaul: HSBC’s share price is down by more than 1% at the time of writing.

Read this next: The sun is setting on Britain’s banking empires

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