While HSBC Holdings PLC is preparing to shed up to 50,000 jobs worldwide, the bank might increase its Buffalo-area workforce.
HSBC executives Tuesday outlined a three-year plan to reduce its number of full-time employees by 22,000 to 25,000, or about 10 percent. Additionally, the London-based bank plans to sell operations in Brazil and Turkey, which would decrease its head count by an additional 25,000.
HSBC aims to cut its annual expenses by more than $4 billion, and by the end of the year expects to complete a review of whether to move its headquarters out of Britain.
Amid those sweeping global changes, HSBC could add to its local job count. Patrick J. Burke, HSBC USA president and CEO, said the bank is working to reduce expenses in its U.S. operations. HSBC has “built up too many back-office and function-support roles in high-cost locations like metro New York,” he said. “We’ll be moving significant numbers of these roles offshore or to our existing lower-cost locations in Chicago or Buffalo.” Burke did not specify how many jobs HSBC might move to Buffalo, or how soon.
Erie County Executive Mark C. Poloncarz said an HSBC representative contacted his office to provide reassurance about the future of Buffalo-area operations amid dire reports of thousands of job cuts planned by the bank.
“She wanted to advise us the cuts would not be impacting us, and based on the information they had received from their corporate headquarters, there would be growth in the Buffalo and Chicago markets,” Poloncarz said. The number of additional of jobs was not yet known, he said.
“It sends a good message about our workforce here and what we have to offer in Western New York,” Poloncarz said. “I feel bad for those across our country and elsewhere who are dealing with job cuts, because we’ve been the recipient of job cuts in the past ourselves for many different companies. But I think at least it says that HSBC understands what they have here in Western New York, the workforce that we have, and that we’re capable of handling the type of work they were doing elsewhere and doing it here.”
HSBC has a major presence in Western New York, with more than 3,000 employees at the Atrium in downtown Buffalo and in leased space in Depew. The bank has committed about $35 million to upgrading those facilities – a project expected to wrap up this summer – and has capacity to house more employees. “Buffalo will continue to be a thriving operational hub for the U.S.,” the bank said in a statement.
In recent years, HSBC sold off its upstate New York branch network and moved out of the downtown skyscraper that used to bear the bank’s name and logos. Those two moves had raised questions about the bank’s long-term intentions for the region.
“I think once they left the tower, there was an assumption that they were sort of abandoning the Buffalo region,” Poloncarz said. “I guess today’s actions prove that’s not the case.”
Burke said HSBC’s U.S. operations are aiming to hold their 2017 costs to the same level they incurred in 2014, “and I’m confident that we will do it.”
The U.S. economy remains a powerful force in the global economy, Burke said. “As the leading international bank, HSBC will benefit enormously with a successful U.S. operation,” he said.
CEO Stuart T. Gulliver, 56, is looking to restore investor confidence in a bank battered by a series of scandals and surging compliance costs. Since taking over in 2011, he has announced more than 87,000 job cuts, exited about 78 businesses and reduced the number of countries the bank operates by 15 to 73.
“HSBC is a big bank to move and they’re definitely moving in the right direction,” said Chris White, who helps oversee about $6 billion, including HSBC shares, at Premier Fund Managers Ltd. in Guildford, England. “A lot of it feels like it was broadly as expected.”
Just months after taking over, Gulliver announced about 30,000 job cuts to trim costs by as much as $2.5 billion. In the latest round, as many as 21,000 of the cuts will be lost in a push for digital banking, automation and branch closures. In the U.K., as many as 8,000 jobs will be cut, Gulliver said.
Under his plan, the CEO will cut risk-weighted assets by about $290 billion, including a reduction at the securities division to less than one-third of the group, and target a return on equity, a measure of profitability, of more than 10 percent. The bank lowered its return on equity target to 10 percent in February from as much as 15 percent. In 2014, the measure was 7.3 percent.
At the investment bank, HSBC plans to cut risk weighted assets by a net $130 billion, or 31 percent, while “keeping costs flat.” The global banking and markets division had a 6 percent profit gain in the first quarter, as revenue from foreign exchange rose.
The savings program will cost $4 billion to $4.5 billion through 2017, according to the statement.
“There are no sacred cows” among HSBC’s business lines and countries the bank operates in when it comes to boosting profitability, Gulliver told investors. The bank will continue to evaluate whether it makes sufficient returns, he said.
Bloomberg News contributed to this report. email: firstname.lastname@example.org