HSBC to cut thousands more jobs

(Financial Times) -- HSBC is gearing up for thousands more job cuts, with Europe's biggest bank by market value set to outline the next stage in its strategic overhaul at an investor day in two months' time.

"There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient."

Stuart Gulliver, HSBC's chief executive, said when he announced annual results last week that he would "fixate on costs" over the coming year and promised to find a further $1bn of annual savings in 2013.

The job cuts target has still to be fixed but people close to the bank suggested up to 5,000 staff could go as part of the $1bn savings plan. If HSBC maintained the recent rate of staff cuts to cost savings, the number would be closer to 10,000.

Mr Gulliver, in charge since early 2011, has spent the past two years trying to streamline HSBC's global network of fiefdoms, both in order to impose more control from head office in London and to strip out overlaps and inefficiencies.

HSBC has already exceeded its target of finding $2.5-$3.5bn of cost savings by 2013, announcing $3.6bn of "sustainable annual savings" with its 2012 results. But the bank remains as far as ever from a related target -- to cut the bank's elevated cost-income ratio to between 48 and 52 per cent.

Last year the ratio, which measures overheads as a proportion of revenue, spiralled upwards to 62.8 per cent. The number was inflated by the one-off cost of paying a $1.9bn fine to US regulators over money laundering and sanctions abuses. But even with that stripped out the cost-income ratio was still 56 per cent, as revenue numbers were held back by anaemic economic growth in much of the world.

The details of Mr Gulliver's plan are set to be outlined to investors in May. The bank is expected to close or sell a further eight to 10 businesses this year and next, in addition to the 49 already divested since 2011.

The new job cuts will come in addition to a sharp reduction of staff numbers -- from 302,000 to 260,000 -- over the past two years. About 10,000 of the headcount reduction so far has been the result of divestments, with the rest due to cuts.

But according to people involved in planning the investor day, the tally of cuts could be more dramatic still if Mr Gulliver presses ahead with plans to uproot HSBC's tradition of in-house software development.

The number of staff working in that area is already estimated to have been trimmed from 27,000 to about 21,000. But many more are likely to go as the bank shifts towards an outsourcing approach.

Bankers said contraction was likely to be gradual and would be offset to an extent by the creation of new jobs as HSBC pushes aggressively into new technology areas, such as mobile banking.

© The Financial Times Limited 2013