Europe Bankers’ Annus Horribilis Continues With 4,000 HSBC Cuts

(Bloomberg) -- Summer just got a bit gloomier for the European banking job market.

HSBC Holdings Plc announced the surprise ouster of its top executive on Monday, but John Flint isn’t the only banker who will go. Europe’s largest lender also fleshed out the extent of a job reduction plan. More than 4,000 posts will be cut, and Chief Financial Officer Ewen Stevenson said the program is aimed at more senior staff.

The pace of cutbacks in the industry has been unrelenting. Just two weeks ago, people familiar with the matter said UniCredit SpA is considering as many as 10,000 cuts later this year. France’s Societe Generale SA is also reducing staff as trading slumps, and Deutsche Bank AG remains embroiled in its latest strategic overhaul.

The reasons for the worst banking job market since the financial crisis are many and varied: the rise of automation, the persistence of negative interest rates in Europe, Brexit. HSBC indicated that geopolitical and trade tensions also helped prompt a rethink, with Chairman Mark Tucker saying new leadership was needed in a world where income wouldn’t grow as quickly as previously assumed.

Parts of the U.K. investment bank are doing well, other parts less so, Stevenson said on a conference call, declining to give more detail. He also cited a “customer selection issue” in Europe, with some clients not generating enough profit to be worthwhile.

HSBC is also more affected by U.S. rates than some other European firms, given the currency peg in Hong Kong, and sizeable Stateside operations that were singled out for criticism on a conference call. The Federal Reserve’s recent dovish turn has reversed optimism about widening lending margins for U.S. lenders, and HSBC is following suit.

Hong Kong has been roiled by unrest for weeks, but HSBC’s executives indicated they were still pleased with growth in the territory. HSBC has about 238,000 employees, according to its website.

Here’s a list of financial firms in Europe, the Middle East and Africa that have announced job cuts since Jan. 1:

  • HSBC’s cuts were first flagged in April, when people familiar with the matter said managers were under pressure to find job reductions as part of a program called Project Oak. A month later, it emerged that a cull of more than 500 jobs would begin within weeks at the global banking and markets unit, with London in the front line.
  • Barclays Plc Chief Executive Officer Jes Staley said the bank cut 3,000 jobs in the second quarter. The cuts were “not concentrated in a particular area, but across the board,” and in divisions that weren’t generating returns, CFO Tushar Morzaria said.
  • UniCredit CEO Jean Pierre Mustier’s strategic plan, to be unveiled in December, may also include a reduction in other operating expenses of as much as 10%, people familiar with the matter said in July.
  • Deutsche Bank envisions about 18,000 job losses in a strategic overhaul that will ditch equities trading and sharply pull back from investment banking businesses in most countries outside Europe.
  • Societe Generale has said it’s cutting 1,600 jobs after a slump in trading revenue. That includes close to 1,200 positions at the global banking and investor solutions division, which houses its trading activities. Dozens of jobs have already gone in London.
  • DWS Group, Deutsche Bank’s asset-management unit, is said to have fired dozens of employees, including about 10 managing directors. More cuts are likely as the business responds to continued pressure on margins.
  • London Stock Exchange Group Plc disclosed plans to eliminate around 5% of global headcount.
  • Banco Santander SA reached an agreement with unions to dismiss 3,223 workers, or 10% of its staff in Spain, and shutter duplicated branches as part of the integration of Banco Popular Espanol SA. The lender is also in the process of closing 140 branches in the U.K. and eliminating 1,400 jobs in Poland, reducing its workforce there by 11%.
  • Bank Pekao SA has embarked on a second wave of job cuts in as many years, with as many as 900 positions, or about 6% of the total, at stake at Poland’s third-largest lender.
  • CaixaBank SA of Spain reached an agreement with unions to eliminate as many as 2,023 positions, the bank said in May.
  • Baader Bank AG, a small German investment-banking boutique, is cutting staff by about 15% and selling assets after a loss.

©2019 Bloomberg L.P.

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