Banking giant HSBC will cut costs by as much as $5 billion within two years, laying off as many as 25,000 staff, the financial services firm informed investors today. The bank said that it would shrink its risk-weighted assets by about $290 billion, including cutting its global banking and markets risk-weighted assets to less than a third of the group's assets.
Europe's largest bank by assets also revealed plans to streamline its 260,000 member workforce and trim its branch numbers by approximately 12 percent and sell its operations in Brazil and Turkey, reducing the bank's employee headcount by an additional 25,000. Prior to this announcement, HSBC had cut its workforce by around 40,000 people since its cost-cutting purge began in 2011.
COO Andy Maguire added that the bank's push towards improved digital systems for consumers, and automation in branches, would result in thousands of job cuts and corresponding cost savings. However, UK trade unions said the proposed job cuts in the U.K. were the just latest example of the workforce being punished for misconduct by senior investment bankers. "This latest wave of job losses is a stab in the back to a dedicated workforce who have put HSBC back on the road to recovery since 2008."
The bank threatened to relocate its headquarters from London to Hong Kong earlier this year. HSBC will now target a return on equity of more than 10 percent by 2017, down from a previous target of 12 percent to 15 percent by 2016.