HSBC Sees Its Future With 40% Less Office Space After Covid

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HSBC Holdings Plc said it expects to eventually shrink its property footprint by 40%, the latest sign of how the pandemic is changing the role of the office.

Europe’s largest bank would reduce its “real estate footprint” over the long term, Group Chief Operating Officer John Hinshaw said in a call Tuesday with analysts after the bank reported fourth-quarter results.

Chief Executive Officer Noel Quinn said on a separate call with reporters that the bank would retain its Canary Wharf headquarters and would look to end leases on “premises elsewhere in London” when they came up for renewal. Ewen Stevenson, chief financial officer, said the costs savings from getting rid of some of its offices represented a “material” opportunity for the bank.

Last year’s abrupt shift to remote working has sparked a debate across industries about future demand for office space. HSBC’s potential reduction would be one of the most dramatic proposed changes seen so far from a major lender.

“The Covid-19 outbreak taught us many roles can be undertaken effectively outside of our branches and offices, accelerating our focus on enabling greater flexibility in future working arrangements,” HSBC said in its 2020 annual report.

About 85% of HSBC’s employees are now able to work from home, the bank said. At certain times last year, up to 70% of HSBC’s 226,059-strong workforce were working remotely with the lender distributing more than 78,000 laptops and other items to employees to enable them to work remotely. The bank said it expects to see a “much greater degree of hybrid working,” as the pandemic is brought under control.

“We expect a change in the way we use our office space, recognizing the work-life balance and environmental benefits of hybrid working arrangements,” HSBC said in its annual report. It said it had made impairments on “certain real estate assets” in 2020.

Some rivals have already made sweeping changes. Standard Chartered Plc said last year that about half its staff will be able to apply for some form of hybrid work from early 2021. It plans to offer flexible work options to more than 90% of its 85,000 staff over three years.

Skeptics of this trend include BlackRock Inc.’s Larry Fink and JPMorgan Chase & Co.’s Jamie Dimon, who has said that working remotely for too long could decrease productivity. Barclays Plc’s Jes Staley said last week he expects his largely homebound bankers to return to their offices this year.

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