HSBC Preps Cost Cuts as CEO Flint Scolds Senior Bankers
(Bloomberg) -- HSBC Holdings Plc has started a cost review that could lead to job cuts, as Chief Executive Officer John Flint rebuked top managers at a meeting in Hong Kong last month for missing revenue and cost targets, according to people familiar with the matter.
About 400 executives attended the global conference where Flint called out leadership for “incompetence” and discussed their inability to keep a rein on expenses, according to the people, who asked not to be named discussing a matter that’s not been publicly disclosed. The bank has asked some senior managers to identify where they can make potential savings including job reductions in a program named “Project Oak,” they said.
HSBC’s review is in early stages, two of the people said. Any cuts are likely to include the investment bank, which has some of the best-remunerated staff, the people said. Affected staff will be informed around mid-year, two of the people said.
The bank, which gets most of its business in Asia, was hit by the meltdown in financial markets, which pushed investment bank revenues lower in the fourth quarter and put further pressure on Flint to rein in costs. The lender has been one of few global financial institutions to avoid major cutbacks recently, adding 6,530 staff last year to take its headcount to more than 235,000.
“Business and function lines constantly re-evaluate their needs to ensure they have the right roles, in the right locations to deliver for our customers and stakeholders,” a spokeswoman for HSBC said in a statement.
Flint has pledged to keep a keener eye on expenses after a disappointing fourth quarter capped his first year in charge of Europe’s largest bank.
The boss vowed then to slow spending as he sought to deliver on a key promise to shareholders: that revenue gains will outpace cost increases, a trend HSBC refers to as positive jaws. He failed to achieve that in his first year at the helm, in part because of the fourth-quarter equities meltdown that also inflicted pain on the bank’s biggest rivals. HSBC said it’s committed to achieving positive jaws this year.
The London-based lender elevated Flint last year to replace Stuart Gulliver, bringing to an end a seven-year term marked by asset sales, job cuts and a pivot toward Asia.
The bank is due to report its first quarter results on Friday. HSBC’s shares have fallen about 10 percent since Flint took charge in February 2018.
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