The pandemic only delayed something otherwise inevitable.
The pandemic has affected not only small businesses but also significant banks. If earlier this week, we spoke about the rough quarter that the American banks had, now the most important bank in the UK comes into focus.
In February, HSBC announced that it plans to cut costs by $4.5 billion by 2022. The restructuring implies, among other things, a cut of 35,000 jobs. Due to the pandemic, the plan has been put on hold, as the bank didn’t want to leave its employees without a job.
At its peak, the bank employed more than 300,000 people, but since the 2008 financial crisis, tables have turned, and it had sold businesses and exited some countries like Brazil in 2016. During this challenging period, HSBC had a 50% profit loss. It forecasted that bad loans could be up to $3 billion because people cannot repay during the crisis.
Now, that the world slowly falls into place, the bank will resume its initial plan. In a memo sent by CEO Noel Quinn, the bank will try to find some other jobs for some of its future former employees, but also many people will become redundant.
Over time, HSBC has been part of some controversies. In 2012 the bank had to pay $1.9 billion to regulators because of inadequate money-laundering controls. On top of that, earlier this month, Mike Pompeo, the US Secretary, called it out for supporting China’s decision to impose a security law in Hong Kong. Moreover, it is reliant on the US's ability to bank in dollars. Although the bank is now based in the UK, it was formed in 1865 in Hong Kong.
HSBC stock fell 27% since March. The market ignored what it seems to be old new, but reacted to the Bank of England’s decision on policy - UK100 lost 0.5%.
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Sources: bbc.com, reuters.com
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