London - When bank bosses make mistakes they like other people to pay for them. In the case of HSBC, it is its own people who will pick up the tab for the billions of dollars in penalties it has racked up in recent years. Not to mention those that are yet to come.
Some 8 000 jobs will go in the UK out of 25 000 globally, and even though many of them will be lost through attrition (the bank turns over more than 3 000 UK staff a year) it's hard not to see at least some compulsory lay-offs being imposed. The resulting savings are designed to get HSBC's return on equity - a measure of profitability - to about 10 percent, something it hasn't achieved for quite some time.
Fines, customer redress, and the need to hire a small army of compliance people to make sure it doesn't happen again, have had a big impact on the bottom line, as Stuart Gulliver, the chief executive, acknowledged.
Does he bear any responsibility for this? Maybe not directly; but, as I've written before, he and his colleagues, who would like to be seen as reformers, were very much a part of a system in which the bank presided over behaviour that was frankly despicable. Now, with shareholders increasingly raising questions about their lack of returns, it's back to the time-honoured technique of making his colleagues pay by instituting a cull.
Gulliver has, of course, been here before. He's axed tens of thousands of jobs, and sold off a truck load of businesses over the past five years. Still his targets elude him, even though he has reduced them.
So, in addition to the lay-offs, Gulliver has decided to create some other noise. That includes hinting that the “broad based”, ring-fenced, Birmingham retail bank that HSBC is creating might be spun off. Being “broad based” would appear to make it a viable independent business. It's even going to get a new name. That might be Midland, the old brand HSBC killed off several years ago; it might be First Direct, the internet and telephone operation that will also sit within the ring fence.
It doesn't really matter. It's just another way of trying to bring the British government, and its regulators, to heel because such a move - which will be made if those regulators don't allow Gulliver to interfere with the ring-fenced business's strategy - would seem to make HSBC's departure from the UK all but inevitable.
But departure to where? That's an interesting question. Outlining how the assessment of its domicile will be made (HSBC may still move even if First Direct Midland does remain in the fold) Gulliver made great play of the preferred location having a stable legal system, a credible regulatory framework and low levels of graft, as rated by Transparency International.
Hong Kong is many people's idea of HSBC's ideal home. It's just that China holds the whip hand there and Transparency doesn't have a very favourable view of China right now. However, were HSBC to choose squeaky-clean Singapore, as some have suggested, Beijing might not be too impressed. The choice might even put at risk the bank's position in the Pearl River Delta, which Gulliver was positively salivating over (and which he needs as much as the lay-offs to hit his targets).
So the decision isn't an easy one. Still, if Gulliver and his friends in the boardroom get it wrong what does it matter? There's always someone else who can be found to pay the price.
The Independent