HSBC Holdings seeks to become leaner and more competitive, however, there are many roadblocks on its journey. Slowing growth in its major markets, the coronavirus epidemic, Britain's withdrawal from the European Union, and lower central bank interest rates.
As part of its overhaul, the bank plans to shed $100 Bn in assets. Additionally, it will slash the size of its investment bank and revamp its US and European businesses. This business decision is set to impact 35,000 jobs in the span of three years.
Noel Quinn, interim Chief Executive shared, "The totality of this program is that our headcount is likely to go from 235,000 to closer to 200,000 over the next three years."
The bank expects that some of these jobs will be lost through natural attrition.
Restructuring & downsizing
The bank is making changes in the group's structure. It is most likely to combine its retail banking and wealth management business unit with global private banking operations to create one of the world's largest wealth management businesses.
As part of restructuring, it would be closing around a third of its 224 branches and target only international and wealthier clients. This would mean putting resources as well as capabilities in different direction. With the refocus of business, the focus around talent decisions will also be shifted. While the bank will reduce the number of employees, it would need to invest in enhancing the capabilities of the existing talent. Additionally, it might hire for new capabilities and replace old.
But first, most recently, the bank has another issue to deal with the coronavirus outbreak. The staff has been affected and hence the overall productivity of the bank.
Coronavirus & Bank's productivity
While HSBC was already dealing with other challenges in terms of revenues and costs, over and above that, the work at the bank got disrupted by the coronavirus epidemic.
The bank shared that the ongoing coronavirus epidemic had significantly impacted its staff and customers, and in fact, it fears that in the long run the outbreak could reduce its revenue and cause bad loans to rise as supply chains are disrupted.
Quinn shared, "Longer term, it is also possible that we may see revenue reductions from lower lending and transaction volumes, and further credit losses stemming from disruption to customer supply chains."
Amid bank's restructuring and its quest with coronavirus epidemic, interim CEO Quinn is auditioning for the permanent role of CEO. As per the report in August, the final decision was then said to be announced within six to 12 months. Let's see how the bank overcomes the many disruptions challenging its business and what leadership changes it makes.