HSBC is planning to hire up to 15,000 people in fast-growing markets in Asia and Latin America over the next three years even after confirmation of the bank’s plans to cull jobs elsewhere.
Stuart Gulliver, HSBC chief executive, revealed plans on Monday to cut up to 30,000 jobs by 2013, as HSBC reported stronger-than-expected first-half results.
The cuts, which analysts expect will come mostly in Europe and the US, are part of Gulliver’s plan to strip up to $3.5bn from the bank’s cost base by 2013. Of the 5,000 job cuts already identified by the bank, 700 will come from the UK, the same in France and the rest from Middle-East and some parts of its Latin American operations.
However, the bank is continuing a hiring spree in Asia and Latin America, particularly in Hong Kong and Brazil. Gulliver said the bank would continue this trend, with plans to hire 3,000-5,000 staff per year in Asia and Latin America.
The shift in focus comes after HSBC reported strong growth in its core Asian markets while its European operations suffered a sharp fall in profits.
Hong Kong and the rest of Asia contributed almost 60 per cent of the group’s overall $11.5bn of pre-tax profit in the first half, 3 per cent higher than the same period last year. Profits overall from Asia excluding Hong Kong jumped 40 per cent on the back of double-digit lending and deposit growth.
In contrast, Europe generated $2.1bn of pre-tax profits, a third lower than the year before.
Analysts said the sharp rise in costs in the first half – which increased 13 per cent to $20.5bn, more than they had expected – was the biggest disappointment in an otherwise solid set of results.
The cost increase was driven largely by the hiring spree in Asia and Latin America, where wages have been rising fast.
Overall group revenues were stable at $35.7bn, while analysts had expected a slight fall.
However, building on the grim trend seen across Europe last week, HSBC’s investment banking business suffered a 12 per cent fall in profits after a weaker performance from its credit and interest rate trading divisions.
The bank sounded a cautious note on its future prospects as regulatory pressures and sovereign credit concerns intensified.
Gulliver said the recent rescue package for Greece had reduced the pressure “from acute to chronic” but serious issues remained.
However, he was relieved at the deal struck by the US administration to lift the debt ceiling.
“We see no sign of the impairment charge worsening in the US. There is no sign that we can see of a risk of a double dip [recession],” he said.
HSBC’s shares rose 2.1 per cent to 607.5p on Monday. -By Sharlene Goff in London and Henny Sender