HSBC to downsize staff in Sri Lanka

The Sri Lankan unit of global banking giant HSBC is planning to downsize its senior staff cadre in a move which will see the bank devote itself to servicing the upper-end of the retail and corporate sector, maximising returns and hopefully, pump in much needed funds to infrastructure projects in the country.

Once styled, ‘The World’s Local Bank’, HSBC has been trying to cash in on the 80-20 rule which states 80 percent of the world’s, or a given country’s, wealth is held by 20 percent of the population.

HSBC Sri Lanka CEO Nick Nicolaou recently told staff that the bank was planning to shed staff this year in a bid to realign the bank’s focus, The Island Financial Review learns.

HSBC Sri Lanka staff, not wanting to be named, told us that the bank was planning to shed executive-level and upper-officer level positions in the bank via a voluntary retirement scheme (VRS). A team from Hong Kong is believed to have visited Sri Lanka to formulate criteria for selecting those who would be asked to take the VRS.

Uncertainty has gripped the bank’s officials who are waiting anxiously to learn their fate.

General staff, called banking assistants, seem to be more comfortable because of strong affiliations with the influential Ceylon Bank Employees’ Union which will make layoffs difficult.

Banking officers and executives are not members of the union and are more vulnerable at this stage. Nevertheless, the proposed VRS scheme needs to be approved by the Labour Commissioner, and sources in the bank said this process has hit a snag, with the commissioner rejecting the bank’s initial proposal.

When contacted, a spokesperson for HSBC said: "The HSBC group is committed to invest in Sri Lanka and will continue to do so in future. The whole of the HSBC Group is going through a global programme that is aimed at improving efficiency, increasing our revenue capability and ensuring our long-term, sustainable growth."

"HSBC Sri Lanka, as part of the Group, will also be implementing this global programme. We are not going to comment on rumours and speculation about our people. However, we can say that where any staff are impacted, we will make every effort to support our people through redeployment, counselling, in-placement and out-placement services," the spokesperson said, not denying nor acknowledging our report, because nothing has been finalised as yet, except for the fact there would be some layoffs.

Foreign media reports said HSBC plans to cut 30,000 jobs worldwide by 2013, with senior and middle management to take the brunt of it (Associated Press, Telegraph UK).

Rumours and speculation is rife among the bank’s Sri Lankan staff because they are yet to learn the formula that would decide their fate and how many of them would be asked to leave when the downsizing comes into affect.

HSBC Sri Lanka celebrated 120 years earlier this month and is planning to invest US$ 7 million to upgrade its head office in Fort. It operates 17 branches in the country, including one in Jaffna.

During the last five years, the bank has provided more than US$ 2 billion to finance infrastructure development projects in the country such as roads, bridges, telecom, tourism and power.

HSBC is also a sovereign ratings advisor to the government and has functioned as joint book runner/manager to the country’s sovereign bond issues.

Over the years, the bank has been moving away from mass market retail and corporate banking.

Opening a savings account requires a deposit of more than Rs. 250,000 while only gold credit cards are now being issued, as the bank moves into consolidate its position as the preferred banker to the more wealthier Sri Lankans.

The bank currently employs around 1,800 people.

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