Will Noel Quinn’s Cost Cutting Plan Benefit HSBC Bank?
As per the reports by Financial Times, soon after Noel Quinn became the interim Chief Officer of HSBC Bank, he is seeking to reduce costs across the banking group by cutting up to 10,000 jobs.
The recently announced plans have leaked out the most ambitious attempts of the lender to cut costs. The cost cutting will be a major blow for the employees with high-paid jobs and affect the unemployment rate of people largely.
A person from HSBC on grounds of anonymity revealed, “We’ve known for years that we need to do something about our cost base, the largest component of which is people-now we are finally grasping the nettle.”
If the job cuts planned are implemented, it would be seen as an add on to the recently laid out plan of about 4,700 redundancies that HSBC bank has leaked out. The bank describes these as “an increasingly complex and challenging global environment”, wherein multiple trade conflicts, Brexit uncertainty and low interest rates have worsened the situation further.
Even though HSBC bank denies to comment on the move, most of the job cuts have been done as a part of a scheme known as “Project Oak”, which is an attempt to encourage executives and managers to shrink their teams by giving funds from a central money bank to cover redundancy pay outs.
Just after 18 months of taking the position as CEO, John Flint was dismissed mainly due to the differences of opinion between him and Mark Tucker as the latter was against Flint’s approach towards cost cutting and setting revenue targets for senior managers to encourage profit growth. As per news, Flint wasn’t really optimistic in avoiding difficult decisions on job cuts.
Considering the authoritative nature of Noel Quinn, he was seen as the best man suitable for the job. For the effective execution of the plan, Quinn has teamed up with Ewen Stevenson, the Chief Financial Officer of HSBC Bank, who actively participated in the same role when he was a part of the Royal Bank of Scotland.
Over the past few months, many banks have actively participated in the cost cutting move. Recently, Commerzbank announced its plans to reduce a tenth of its workforce by cutting an equivalent of 4,300 full time positions and shutting off 200 branches.
Germany-based Commerzbank said, “A further group-wide headcount reduction is regrettable but inevitable…the aim will be to implement [it] in as socially responsible a way as possible.”
As per sources, the strategy was focused towards helping the bank achieve additional growth in assets and customers with the aim of increasing revenues by 2023.
The cost cutting agenda of the banking sector will affect the livelihood of thousands of people who have been working in the sector for many years.
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