HSBC will slash software costs $900 million (£691 million) by 2022 under a radical global restructuring, which will also see it trim existing technology costs by $1.2 billion.
The storied banking giant is laying off 35,000 people and fundamentally reshaping its business amid plans to trim costs by $4.5 billion in the next 22 months.
The move came as profits fell 33 percent year-on-year to $13.35 billion in 2019, it revealed late Monday. Executives want to boost returns of eight percent to a planned 12 percent.
HSBC intends to deleverage risk-weighted assets (RWA) of $250 billion on a gross basis, mainly in its Global Markets segment in Europe and the US.
HSBC Software Cuts
While legacy software vendors look set to face significant pain, the bank said it will invest heavily in “invest in innovative digital systems and solutions”.
Some 20 percent of planned $4.5 billion savings will be delivered via “technology enablement” meanwhile as it modernises IT infrastructure.
These will see it consolidate middle and back office activities in the US, and “streamline functions to simplify our organisation and reduce total operating costs by 10-15 percent.”
Noel Quinn, HSBC Group Chief Executive, said: “We are taking decisive action today to address underperforming parts of the business, to redistribute capital to the growth opportunity, to simplify our business – and in so doing reduce the cost base of HSBC.
“But it’s for a purpose, and that purpose is to grow.”
He added: “We are going to take three actions. First, we are going to reshape the parts of the Group that are underperforming from a return perspective.
“Second, we are going to reduce the cost base of the group whilst not affecting our investment capacity – we will continue to invest for growth.
“Third, we are going to make the Group simpler to operate, reduce complexity so that we have greater pace, greater agility and a less bureaucratic environment.”
As part of the restructuring, HSBC will consolidate its number of businesses from four to three, with its Global Private Banking, and Retail Banking and Wealth Management segments to form a single Wealth and Personal Banking (WPB) unit.
Reaction to follow.