Tier 1 FX interbank dealer to give up 40% of its office space
HSBC, one of Canary Wharf’s mainstays in the electronic trading industry, is going through a huge restructure with execs off to the APAC region and closure of over 40% of London office space
First, it was the suspension of dividends, then came the plan for corporate restructuring, part of which will result in HSBC’s senior executive team being redeployed from London, home to the company’s massive Tier 1 interbank FX dealing center at Canary Wharf, to Hong Kong.
The “Pivot To Asia” initiative by HSBC – itself an acronym for Hong Kong Shanghai Banking Corporation – is not all.
Today, the world’s ninth-largest Tier 1 FX dealer by market share has confirmed that it will close over 40% of its office space, however, it will retain its full presence in the all-important Canary Wharf.
HSBC is planning to ditch almost half its office space – but insisted it will keep its Canary Wharf headquarters in London.
Posting a 34 per cent drop in profits for 2020 to £6.3billion, the bank said it would reduce the space it occupies by 40 per cent to cut costs and allow staff to work from home more often.
And while its commitment to Canary Wharf will help to rebuild the deserted business hotspot after lockdown, chief executive Noel Quinn said offices elsewhere in the UK were likely to be axed.
Mr Quinn has Quinn trotted out the same line that was uttered by Lloyds of London’s executives recently, saying that there would be a very different style of working post-Covid, where there will be much more of a hybrid model of people working in the offices in a different way, but also working from home where they want to’.
What they really mean is that the financial disaster ensuing from the government’s heavy-handed and draconian obsession with locking everyone down and wrecking the economy has caused a cost issue, and Mr Quinn’s statement is the brightest side from which this catastrophe can be viewed.
London’s position as the global center for all financial services from the dominance of Tier 1 banking to its unfaltering status as electronic trading talent, infrastructure and corporate capital of the world has remained totally intact throughout the course of 2020.
Despite many other companies have had to close their operations as a result of Boris Johnson’s capitulation to global pressure and disloyalty to his own electorate of small and large business owners who employ the people who voted for him which saw him turn on his public and lock them down, force them out of business and into the dependency of absurd furlough schemes and government-backed debts, causing them to lose their livelihoods and freedoms forever, the banks and fintechs have been carrying on as normal and excelling.
Largely, this is a result of the ability for most to work from home, and certainly, the London-based professionals in the electronic trading industry have never been so busy, their dining room tables now their office, from 6.00 am until the late hours of the evening for most of this year.
We can thank the infrastructure technology sector for this, which is a far cry from when I began my career in this industry 29 years ago, a time at which physical servers and on-site equipment meant there would be no way anyone, even a back-office clerk, would be able to work from home.
Lloyd’s of London chairman Bruce Carnegie-Brown said that coronavirus had sped up the process of it becoming ‘a truly flexible workplace’. Founded in 1686, it is the world’s biggest and oldest insurance market and a pillar of the City of London.
It is housed in a modern-style Grade 1- listed building near the Gherkin but began operating remotely in lockdown.
Switching to a more flexible model would follow moves at many of the City’s big financial firms and now HSBC appears to be embracing this philosophy, which may well save cost on the face of it, but it will absolutely reduce the importance of workplace interaction and synergy with office-based clients.
Mr Carnegie-Brown said: ‘In the longer term, we are likely to see a blended approach that enables the best of remote working with the benefits of a flexible workspace.’
In the case of Lloyds, that was a truly odd decision: at least HSBC is keeping its office rather than transferring everyone to their kitchen tables.
The cost-saving would likely be tremendous, even if HSBC’s staff and names invoice HSBC for their power, telephone and internet usage.
It will be interesting to see how many ECNs, prime of primes and service providing vendors follow this path. My hope is that none of them will, as this is most certainly a bad direction for our industry which needs to be in proper offices, rather than remote.
It is a relationship and talent business, and these two important factors, combined with the interaction with technology and proper professional facilities are vital tenets.
Let’s hope that Lloyd’s bad decision does not influence the rest of us and that HSBC does not go down the work from a home route in full.
Mr Quinn added: ‘We will always have the building here in Canary Wharf, this will be the primary London office. We’ll probably release premises elsewhere in London that are coming up for lease renewal over the next two to three years.’
Even before the lockdowns battered profits, HSBC was trying to cut costs and focus on its more profitable businesses in Asia. It is planning to shift capital to Hong Kong and focus on its wealth management arm there, in an effort to grab a portion of the growing number of well-off citizens.
However, its efforts to grow in the East while retaining a foothold in the West have angered MPs. In an uncomfortable grilling by the Foreign Affairs Committee last month, Quinn was accused of aiding and abetting one of the biggest crackdowns on democracy’.
Despite the heated criticism, Quinn said HSBC would step up its investment in Asia and the Middle East.