Ten thousand job cuts make it seem like HSBC’s caretaker boss is just the tough guy the sprawling megabank needs.
After all, Noel Quinn was promoted to the chief executive role after John Flint was hoiked for failing to implement change fast enough.
Trouble is, when you consider HSBC has 238,000 staff around the world, Quinn’s move seems slightly less bold. Most big banks have been quietly cutting their London and continental European operations at a far faster pace for years.
The boss of one says its London HQ has cut its headcount from 11,000 to 7000 in the past seven years. It’s reasonable to suspect cuts of similar magnitude elsewhere.
Brexit has caused some of that decline in London employment, he says, but the vast majority is due to automation. IT and artificial intelligence have swept through banks’ back-office systems, but are increasingly moving to the front office in simpler products such as foreign exchange, bringing cheaper services for clients and killing jobs.
McKinsey predicts up to a quarter of all banks’ work will be automated by a new wave of super-powerful microprocessors able to accelerate machine learning.
Put that into a world where western interest rates are near-zero, or even negative, while Asia offers between 2.25% (Hong Kong) and 6.25% (Vietnam), and it’s obvious a global bank should be cutting costs in the west and investing in the east. Particularly with millions of people in the region becoming wealthier and needing more banking services.
The trouble is, HSBC has been talking about these dynamics for years. For Quinn to retain the job permanently, he has to act on them. Fast.
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