HSBC and Santander step up cost-cutting efforts

HSBC and Santander step up cost-cutting efforts

HSBC and Santander are to accelerate their cost-cutting efforts, leading to thousands more jobs losses, as a combination of Covid loan loss provisions and low interest rates lower profits.

Santander, which returned to profit in the third quarter and remains ahead of targets to achieve cost savings of €1 billion in Europe by 2020, has drawn up plans to achieve an additional €1 billion in savings by 2022.

Speaking to shareholders, chairman Anna Botin, announced plans to create a global native digital consumer bank with the combination of Openbank and Santander Consumer Finance

“SCF and Openbank are two businesses with excellent potential for growth," she says. "SCF, Europe’s consumer finance leader, serves over 20 million customers in 15 markets. Openbank is outperforming - and outgrowing - European digital banks in deposits, with a full-fledged retail product suite marketed on an innovative, scalable and efficient banking platform, a software built by us."

This, along with a programme to collapse all of its disparate payments businesses into a single entity, will add to the saving promised at last year's investor day, she says.

For the 2022 target, Spanish newspaper Expansion reported that Santander was planning to lay off around 3,000 of its employees, around 11% of its workforce in Spain, as customers continue the shift towards digital channels.

Nearly half the sales (44%) registered in the first nine months of the year were on digital channels, eight percentage points more than in 2019.

Chief financial officer, Jose Antonio García Cantera, told Bloomberg the bank would discuss job cuts with unions before providing any further details.

HSBC, which also delivered better-than-expected Q3 returns, said it would be taking cost cuts further than originally planned. The announcement comes just months after the bank renewed its efforts to slash 35,000 jobs across its operations.

In a statement, the banks says: “Given the significant changes in the operating environment, we intend to accelerate the transformation of the group. We expect to reduce the group’s 2022 annual cost base beyond our original $31bn target, while sustaining investment in our focus areas.”

Meanwhile, its chief finance director, Ewen Stevenson, warned the bank could begin to charge for current accounts, including in the UK.

“We will have to look at charging for basic banking services in some markets, because a large number of our customers in this environment will be losing us money,” Stevenson told Reuters.

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