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HSBC plans to slash office space post-COVID

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
HSBC building in the financial district of Canary Wharf, London. Photo: Kieran Doherty/Reuters
HSBC building in the financial district of Canary Wharf, London. Photo: Kieran Doherty/Reuters

HSBC (HSBA.L) plans to radically slash its office footprint in the coming years as it cuts staff and moves to an "agile" way of working post-COVID.

Europe's biggest bank said in a strategy update on Tuesday it hoped to reduce its office space globally by 40% "over the long term". The plans do not apply to the bank's branch network, chief executive Noel Quinn said.

Quinn said the cuts were enabled by “a very different style of working post-COVID than we had before." The bank said in a presentation it would be "moving to an agile way-of-working.”

READ MORE: Barclays CEO: Packed Canary Wharf offices 'may be a thing of the past'

“They’ll be much more of a hybrid model of people working in the offices, but in a different way, but also working from home when they want to," Quinn said.

Quinn said HSBC was committed to staying at its Canary Wharf headquarters, which houses 10,000 staff. However, smaller offices around London would likely be closed, he said.

“Take London for example — we will have the building here at Canary Wharf, this will be the primary London office, the nature of working in that office will change to have a higher occupancy per square foot because we’ll have a hybrid style of working and we’ll probably release premises elsewhere in London that are coming up for lease renewal over the two to three years," he said on a call with journalists.

Other banks and large corporates are reconsidering how and where staff will work post-COVID. Barclays (BARC.L) chief executive Jes Staley last year said packed city centre offices could be a "thing of the past." Twitter (TWTR) has told staff they can work from home indefinitely.

WATCH: Is work from home here to stay? What UK businesses are planning post-lockdown

READ MORE: HSBC resumes dividend as profits drop by a third

HSBC is part way through a global restructuring programme in which it plans to cut 35,000 staff. Lower staffing numbers will help the office plans by reducing the need for space. The bank said in a presentation that "driving efficiencies to reduce headcount" would help it to cut on real estate costs.

Ewan Stevenson, HSBC's chief finance officer, said the bank spends billions each year on real estate. Savings from office space reduction would be "material", he said, without giving a specific figure. HSBC hopes to cut total costs by $4.5bn (£3.2bn) by 2022 under its current transformation plan.

Quinn and Stevenson's comments came as the bank reported on annual results. HSBC beat City forecasts but reported a 34% drop in profits due to the COVID-19 pandemic.

WATCH: HSBC bets on Asian wealth as profits tumble