HSBC has suspended layoffs and may adjust its planned restructuring scheme due to the coronavirus pandemic, the U.K. bank’s chief executive officer said Friday.
HSBC CEO Noel Quinn said in a statement to investors that the bank would need to reevaluate its cost-cutting programs and reorganization push. The London-based bank in February announced plans for an overhaul, which included cutting 35,000 jobs, trimming "underperforming" operations in the United States and Europe and strengthening its investment banking arms in Asia and the Middle East. But the outbreak has forced bank officials to rethink that strategy.
"Of course, we are now operating in a very different context to that we faced in February," Quinn said in a statement. "Therefore, we will need to consider what additional actions we need to take in response to the new economic circumstances that will emerge post COVID-19."
HSBC has already temporarily halted some of its planned layoffs, as it "would not have been appropriate to proceed with some of our job reduction programs in the middle of the current crisis," said Quinn, who was appointed CEO in March after serving in an interim capacity. The bank’s decision to reconsider its layoffs comes as many large banks in both Europe and the U.S. have pledged not to cut jobs through the pandemic. Morgan Stanley and Bank of America, for example, have both reassured employees that there will not be layoffs through 2020.
Quinn’s statement Friday added that the lender is nonetheless moving forward with other parts of the planned restructuring initiative, including consolidating its retail banking and wealth management unit with its global private banking arm.
"The consequences of the COVID-19 pandemic, and our role in helping our customers succeed in the recovery still to come, increase the need to press ahead with our transformation wherever possible," Quinn said.
In addition to reviewing its overhaul plans, HSBC has taken other steps to prepare for the economic fallout from the pandemic. In March, the bank canceled a planned interim dividend to comply with a request from Britain’s bank regulator, the UK Prudential Regulation Authority, and said it would not pay dividends or engage in buy backs until the end of the year. Other big banks based in Europe have similarly agreed to suspend shareholder payouts to free up capital for loans to businesses struggling during the outbreak.
Chairman Mark Tucker said in Friday’s statement from the bank that he understands that shareholders are "deeply disappointed" by the decision and that HSBC will revisit its dividend policy later this year when the financial impact of the pandemic is more clear.