Reuters / Arnd Wiegmann
- HSBC made the surprising announcement late Sunday that John Flint would be stepping down as CEO after just 18 months in the role.
- Following the departure, HSBC confirmed its plan to cut up to 2% of the bank’s workforce of almost 238,000.
- The London-based bank is just the latest to slash thousands of jobs as the industry faces headwinds from low interest rates, rising trade tensions, and a challenging environment for trading.
- Shares of HSBC fell more than 2% in early trading on Monday.
- Watch HSBC trade live.
HSBC is piling on to Wall Street’s job cuts. And it got rid of its CEO to boot.
John Flint, who has held the firm’s top job for just 18 months, agreed to step down from his role in a surprising decision. The London-based bank also said it plans to reduce its 238,000-person headcount by up to 2% to cope with a more challenging outlook for the global economy.
The news sent shares of HSBC sliding by more than 2% in early trading on Monday. HSBC’s stock price has fallen more than 20% since Flint stepped in as CEO in February 2018.
"In an increasingly complex and challenging global environment, the board feels a change is needed to make the most of the opportunities before us," Mark Tucker, the chairman of HSBC’s board, said on the company’s earnings call.
Ewen Stevenson, the chief financial officer of HSBC, said the firm expects to pay out between $650 million and $700 million in severance costs this year as a result of the job cuts, but the bank’s wage costs will be reduced by that amount in 2020.
"This program is about 4% of our overall wage cost for less than 2% of the headcount.," He said during the bank’s earnings call. "It is at the more senior levels of the organization and, therefore, more strategic in terms of its focus."
HSBC is far from the only bank bowing to the challenges facing the industry. Major Wall Street banks took a hit during the second quarter as they grappled with low interest rates dampening margins and a slowdown in their trading businesses.
Deutsche Bank is still undergoing a massive restructuring of its investment banking and equities trading businesses that will include 18,000 layoffs. Citigroup is also expected to cut hundreds of jobs across its fixed-income and equities trading divisions.
HSBC is was roughly flat year-to-date through Friday.
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Source: Business Insider – feedback@businessinsider.com (Daniel Strauss)