HSBC, in line with its strategy to cut costs, boost profits and increase returns to its shareholders, has decided to stop hiring for the current year. It will also freeze the salaries of all its employees in 2016 as it pushes through with its plans for annual cost savings of up to $5bn (£3.5bn, €4.6bn) by 2017. The freeze on salaries and hiring is to be at the global level.
According to Reuters, the lender, whose online banking system was hit by a cyberattack on 29 January, sent an email to its staff that had details on the latest cost-saving measures. A HSBC spokeswoman confirmed the same and said "As flagged in our Investor Update we have targeted significant cost reductions by the end of 2017."
This is not the first time that HSBC has cut costs in response to weak economic growth and tighter global regulation of the bank's balance sheet risk. While in June 2015, it announced its plans to reduce its investment banking division by a third and overall cut one in five jobs, in October 2015 the lender cut salaries of its investment banking contractors in London by 10%.
This news follows HSBC's recent board meeting to decide on whether or not to shift its headquarters. It was reported that HSBC's proposed move to Hong Kong was unlikely to provide the British lender's tax bill much relief and could in fact end up costing the bank millions of dollars in tax deduction each year.
The move also follows the recent cost-cutting drive that other banks have adopted. For instance, Jes Staley, who was appointed the CEO of Barclays in October 2015 to turn around the business, sold its risk analytics and index solutions business to Bloomberg and cut many jobs across its investment banking divisions recently, in an effort to save costs.