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* Cuts paused after virus now "more necessary"
* Bosses looking to bolster business for 2021
* Axed staff will remain paid for much of 2020
(Adds reaction, updates shares)
By Lawrence White and Sinead Cruise
LONDON, June 17 (Reuters) - HSBC is resuming plans to cut
around 35,000 jobs which it put on ice after the coronavirus
outbreak, as Europe's biggest bank grapples with the impact on
its already falling profits.
It will also maintain a freeze on almost all external
hiring, Chief Executive Noel Quinn said in a memo sent to HSBC's
235,000 staff worldwide on Wednesday and seen by Reuters.
"We could not pause the job losses indefinitely - it was
always a question of 'not if, but when'," Quinn said, adding
that the measures first announced in February were "even more
necessary today".
An HSBC spokeswoman confirmed the contents of the memo.
HSBC had postponed the job cuts, part of a wider
restructuring to cut $4.5 billion in costs, in March saying the
extraordinary circumstances meant it would be wrong to push
staff out.
However, Quinn said it now had to resume the programme as
profits fall and economic forecasts point to a challenging time
ahead, adding that he had asked senior executives to look at
ways to cut more costs in the second half of 2020.
The bulk of the job cuts are likely in the back office at
Global Banking and Markets (GBM), which houses HSBC's investment
banking and trading, a senior executive familiar with the plans
said.
The cuts will also affect senior bankers in Britain who work
in GBM and HSBC's head office, as well as support staff in its
businesses around the world, the executive added.
While HSBC expects natural attrition of up to 25,000 roles
each year, redeploying all affected staff would be unrealistic,
the executive said.
WIDER WOES
The resumption of job cuts is unlikely to affect the timing
or size of dividends HSBC may pay in the future, the executive
said, with that decision likely to be based more around the
economic outlook for next year and beyond, assuming regulators
approve shareholder payouts once more.
HSBC's move is a foretaste of wider cuts in the sector as
banks confront a harsh operating environment, analysts said.
"It is only a matter of time before substantial further
cost-trimming plans are announced," analyst John Cronin at
Dublin-based broker Goodbody said.
Shares in HSBC have fallen 27% since the start of March,
with the pandemic prompting it to set aside $3 billion in bad
loan provisions in its first quarter earnings.
Under the initial plan, HSBC said it would merge its private
banking and wealth business, pare back its European equity
business and reduce its U.S. retail network.
Shares in HSBC, which has come under fire from lawmakers on
both sides of the Atlantic for its support for a new security
law in Hong Kong, rose by 1% in London.
(Editing by Rachel Armstrong, Clarence Fernandez and Alexander
Smith)
