- Peter Wong details plans in interview with Hong Kong paper
- Extra staff would be hired in the southern Pearl River Delta
HSBC Holdings Plc plans to add 4,000 jobs in China’s Pearl River Delta region over the next three to four years, expanding operations in one of the country’s leading economic regions even as the bank shrinks its global workforce.
Asia-Pacific Chief Executive Officer Peter Wong outlined the plans in an interview with the Hong Kong Economic Times, published Monday and confirmed by the bank. The hiring spree is part of a push to expand retail banking and wealth management business as Chief Executive Officer Stuart Gulliver shifts about $100 billion of investment to the region.
Gulliver, 56, said last month that about half of $180 billion to $230 billion of risk-weighted assets the bank plans to redeploy under a revised strategy will be invested in Asia.
The 4,000 new hires would amount to a 30 percent increase from the 13,000 people now working for HSBC in the Pearl River Delta. By contrast, the bank plans to trim global headcount by some 50,000 over three years and reduce annual costs by up to $5 billion.
HSBC is shifting investment to Asia, its best-performing region, while cutting unprofitable divisions and country units such as Brazil and Turkey. The Pearl River Delta, a region to the north of Hong Kong centered around the city of Guangzhou, is home to more than 40 million people.
“The suggested headcount increase appears entirely consistent with the strategic plan as described on 9 June, albeit the scale of the opportunity remains dependent on the broader macro environment,” said Ian Gordon, an analyst at Investec Plc with a buy rating on the stock. “It is no secret that HSBC faces a number of revenue headwinds, exacerbated by recent currency shifts, so I expect management’s focus on cost efficiency to intensify.”
HSBC aims to increase its pretax profit in the Pearl River Delta to $1 billion within five years from $100 million last year, Wong told the newspaper. Gareth Hewett, a spokesman for HSBC in Hong Kong, confirmed the report.
Hong Kong is becoming more important to HSBC as new capital regulations in Europe dent profitability: the city contributed 66 percent of HSBC’s first-half pretax profit in the Asia Pacific region, according to its interim report. China’s economic slowdown is intensifying have been stoked by wild stock swings and government interventions to prop up markets.
“HSBC is probably too optimistic about the outlook for China given the country’s economic slowdown, it will see a lot of competition with domestic lenders,” said Zheng Chunming, a Shanghai-based banking analyst at Capital Securities Corp. “Investors are concerned about China’s rising nonperforming loans and slowing economy. They’re acting cautiously when they think about investing in HSBC.”
HSBC shares rose 1.3 percent to 496.85 pence in London at 11:45 a.m., paring its decline this year to 18.4 percent. In Hong Kong, the lender fell 0.6 percent.