HSBC plans to axe hundreds of investment bank jobs to help cut cost

HSBC plans to axe hundreds of investment bank jobs to help cut cost

New Delhi, May 31: HSBC Holdings Plc is considering eliminating hundreds of investment banking jobs as Chief Executive Officer John Flint pressures the lender’s top managers to cut costs, according to people familiar with the plan.
At least 500 jobs could go within global banking and markets, although formal numbers have not been communicated, said the people who asked not to be named. Greg Guyett, who recently took sole control of global banking, will be pushing through cuts in his part of the business, one person said.
The reductions are expected to begin at the unit as soon as mid-June and will take place over the year, the people said. They are part of wider job reductions across the lender, and mark the latest stage of HSBC’s “Project Oak” revamp. “Business and function lines constantly re-evaluate their needs to ensure they have the right roles in the right locations,” HSBC said in a statement.
Shares in the bank jumped to an intraday high after the news and were trading down 0.1% at 2:10 p.m. in London.
Flint has made “positive jaws” — banking jargon for keeping the top line growing faster than expenses — a key focus as he seeks to put his stamp on the bank, which makes the bulk of its revenue in Asia. The CEO berated his most senior managers in March for missing cost targets, people with knowledge of the matter have said.
The unit known as GBM houses the lender’s corporate finance and trading operations, employing about 24,000 of the division’s total workforce of 48,500 which includes contractors and other support staff.
Project Oak
Project Oak’s job reductions should help the company’s goal of achieving positive jaws, as the cost incurred can be accounted for as a one-off item rather than counting toward HSBC’s overall cost base, one of the people said. That’s a deliberate strategy to encourage aggressive reductions, as managers may have resisted making necessary cuts in the past to avoid the hit to their own budgets from costs such as severance payments, the person said.