HSBC announces major overhaul and is set to cut 35,000 jobs as profits plunge

HSBC has announced a 33% drop in profits. Picture by NIKLAS HALLE'N/AFP via Getty Images

Reports now suggest 35,000 jobs worldwide will be cut as HSBC interim chief executive Noel Quinn carries out a major overhaul.

It is not yet known how the proposed job cuts will affect banks and staff in the North East of England.

In August 2019, the company announced 4,700 job cuts from its then workforce of 238,000.

Analysts had initially expected HSBC, which is Europe's largest bank, to axe around 10,000 jobs, including around 1,000 in the UK.

But reports on Tuesday, February 18, show the actual figure is much higher at 35,000 (which is around 15% of the workforce).

The bank reported a 33% fall in pre-tax profit for 2019 to $13.35 billion (£10.2 billion) – which is below both analysts' and its own chief executive expectations.

HSBC said the drop was due to "a goodwill impairment" of $7.3 billion (£5.6 billion).

"This arose from an update to long-term economic growth assumptions, which impacted a number of our businesses," HSBC's annual results statement said.

Mr Quinn indicated more was expected of the company.

He said: "The group's 2019 performance was resilient, however parts of our business are not delivering acceptable returns."

The bank has its headquarters in London but almost half of its revenue and nearly 90% of its profits in 2018 came from Asia, with much of that coming from Hong Kong.

HSBC said it will "continue to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020".

"Depending on how the situation develops, there is the potential for any associated economic slowdown to impact our expected credit losses in Hong Kong and mainland China."

The HSBC statement also addressed Brexit, saying that: "Now that the UK has officially left the EU, negotiations can begin on their future relationship.

"This has provided some certainty, but no trade negotiation is ever straightforward. It is essential that the eventual agreement protects and fosters the many benefits that financial services provide to both the UK and the EU."