HSBC is cutting 110 support staff in Switzerland and scaling back its office space in Geneva following a bad year for its Swiss private bank, during which wealthy clients withdrew a net $1bn of their money.
Employees at the lender’s Quai des Bergues office in the city centre were told on Monday last week that two floors of the building would be shut down and more staff would have to share desks “to help use our office space in the most efficient way”.
“This will reduce our Geneva building cost by 20 per cent for the coming years, representing a significant contribution to improving the profitability of the Swiss bank,” read a memo seen by the Financial Times.
Many of the back- and middle-office roles are being relocated to cheaper locations such as its outsourcing centres in Poland and Mumbai, according to people familiar with the decision.
The office space reduction is in line with a group-level policy to slash 40 per cent from HSBC’s global head-office costs over time, after the pandemic disrupted working practices.
However, the cost-cutting measures also reflect the pressure on its Swiss private bank as it prepares to reveal another bad year, which stands in stark contrast to a buoyant period for larger rivals. This month, UBS and Julius Baer posted record earnings for 2021 and reported a surge in client assets as the wealthy invested in resurgent global markets.
By comparison, net new money brought in by HSBC’s Swiss private bank dropped by $1bn last year — meaning on balance more client cash was withdrawn than deposited — according to two people familiar with the performance.
However, one of the people said that the drop was due to a few very large clients pulling their assets, rather than a decline in the total number of customers. The lender reports its full-year earnings on February 22.
The cuts in Switzerland come just a year after HSBC held up the country as one it would aim to invest in to help grow its wealth management business.
An internal company presentation seen by the FT flagged the negative net new money issue and warned that “enhanced monitoring of direct costs” was required in the country.
While HSBC has pledged to invest $3.5bn and hire more than 5,000 wealth advisers in China and across Asia, morale is low in the European arm of the business, according to several staff spoken to by the FT. It has underperformed the rest of the group for years and felt the brunt of job, costs and asset cuts as capital and resources are shifted to more profitable markets in Asia.
Some employees fear that HSBC does not have the scale to compete in Switzerland with rivals such as UBS and Credit Suisse. They are concerned that offshoring more jobs will make the situation worse, according to one of the people.
Overall, HSBC’s global private banking revenues were up 1 per cent in the first nine months of 2021, but the group did not break down the results by geography. In the third quarter, it disclosed that private banking attracted net new money worth $3.9bn, but $3.1bn of that was booked in Asia.
A spokesman for the bank said that the Geneva job cuts would have no impact on front-office services and added that HSBC would continue to hire relationship managers and investment counsellors in the coming years.
“We remain fully committed to Switzerland, an important private banking hub globally and a key market,” he said. “The Swiss bank will expand its business with clients from Europe, the Middle East and Asia, build out its proposition for ultra-high net worth clients and continue to hire talent.”
Additional reporting by Tabby Kinder in London