HSBC reportedly mulls dropping 40 French corporate clients in restructuring

October 16, 2020.

may stop doing business with 40 French companies en route to completing its massive global restructuring, dumping one-fifth of its corporate client base in the country.

The U.K.-based bank’s French subsidiary is considering proposed reductions that would trim revenue by 6.7% and cut risk-weighted assets in France by EUR 3.5 billion ($4.1 billion), or about one-third, according to an internal document detailed by Bloomberg on Friday. The result would apparently be a sharper focus at HSBC France on clients and groups that bring in more profit and take advantage of more of the bank’s services.

The document’s existence was first reported by French newspaper L’Agefi.

The internal document is said to project trimming the bank’s local research team by three-fifths while refocusing its coverage on large-cap companies, and would also affect sales and capital markets teams. Regarding the corporate finance business, HSBC reportedly plans to retain some senior bankers in Paris and have more junior staff working from London.

“Our strategy is very clear: We want to be a leading international bank in Europe, supporting clients that value our international network with a strong proposition focused on transactional banking and financing,” an HSBC France spokeswoman told Fastinform. “We are creating an integrated continental European bank anchored on Paris, connecting our customers to HSBC’s global network, and providing access to continental Europe for HSBC’s customers around the world.” 

A consultancy working with the bank’s employee representation body apparently drafted the leaked document to help frame job-cut negotiations, for which talks concluded a week ago. A plan to move forward is expected to be relayed to staff in the near future.

In July, the Force Ouvrière union revealed that the bank planned to drop 255 jobs from the French subsidiary’s flagging global and banking markets division. The layoffs were set to reduce the unit’s workforce by nearly 40%, marking the first occurrence of layoffs stemming from economic conditions at HSBC France, whose retail business is reportedly nearing a sale that would support the bank’s larger cost-cutting effort.

The spokeswoman declined to comment on the specifics of the document but said it is “an internal working document for the working councils in the context of the consultation on the project related to global banking and market activities of HSBC France.”

In June, HSBC revived a plan that had been postponed during the COVID-19 pandemic to cut costs by $4.5 billion and shed 35,000 jobs by 2022 as part of a broader restructuring that will result in scaled-back operations in Europe in the U.S. in favor of a larger presence in Asia and the Middle East.

The plan, first unveiled in February, said that layoffs would likely focus on the bank’s “underperforming” units in Europe and the U.S. HSBC, Europe’s largest bank by assets, additionally said that it would merge its private banking and wealth management units.

Since then, the coronavirus and the uncertain economy led the bank to warn of an unpredictable second half of 2020, after profits plummeted by 82.4% year over year to hit $1.1 billion in the second quarter. 

CEO Noel Quinn had hoped to hit the bank’s first $1 billion in expense reductions this year, but that looks unlikely following $300 million of cuts in the first half and $500 million estimated for the second. The company is aiming to make up the difference in 2021, Quinn said in August.

HSBC will report its third-quarter earnings Oct. 27.