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Summary
- Goldman Sachs top boss David Solomon has called remote working an aberration.
- Footsie-listed HSBC and Lloyds Banking Group are expected to cut office spaces to capitalise on remote working culture
Calling remote working an aberration, Goldman Sachs CEO David Solomon said he expects that employees to return to the office and work in the conventional office environment. Notably, 90 per cent of the Wall Street giant’s workforce has worked from home throughout the course of the pandemic induced lockdown restrictions.
Also read: Goldman Sachs to Pay US$2 billion over Malaysia’s 1MDB scandal
Solomon said that remote working is not suitable for the work culture of the industry while speaking at Credit Suisse Group conference on Wednesday, adding that remote working is not best suited for banking & financial services, which is an innovative and collaborative business.
He added that the New York-based multinational investment bank and financial services company is planning to recruit 3,000 new heads shortly and wants to see them in office. The CEO has been pushing government officials to implement quick changes to the system so that the company can see their employees back in office spaces. The vaccine distribution process might act as a catalyst in returning towards normalcy.
However, remote working is doing wonders for other industries, such as the technology sector. Tech giants are expected to reduce their staff substantially and said that the employees might be asked to work remotely. Meanwhile, in the finance sector, several industry veterans agree with Solomon and want workers to be back.
In September 2020, Jamie Dimon, Chief Executive of JP Morgan, said that remote working had hampered the investment bank’s productivity. Barclays top boss Jes Staley hoped that Covid-19 vaccine rollout could speed up office working soon.
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Cutting office spaces
FTSE 100-listed HSBC Holdings (LON: HSBA) is expected to reduce its office spaces by 40 per cent in line with the industry’s latest trend. The bank aims to capitalise on remote working culture, which is the new normal in the post-pandemic era, and it will help the bank in cutting down on its business travel costs as well.
CEO Noel Quinn might not sign up for some lease renewal in the future and would probably vacate office spaces elsewhere in the capital except the London’s Canary Wharf head office. The closing of office space might be an easy task as HSBC is expected to axe 35,000 jobs as part of its cost-cutting plans. Notably, shares of HSBC Bank have delivered a solid return of 14.41 per cent on the YTD scale.
Also read: What led HSBC to resume dividend pay-outs despite a drop in profits
In the next two years, Lloyds Banking Group (LON: LLOY) is expected to downsize its office spaces by 20 per cent, as it is promoting remote working as a lifestyle change. The Footsie-listed financial institution announced to cut office spaces after revealing a substantial drop of 72 per cent in annual pre-tax profits to £1.2 billion for FY2020. Also, a major chunk of the workforce said that they preferred a remote working environment.
Lloyd managed to deliver a statutory profit after tax of £1.4 billion, despite the significant impairment charge taken in the year 2020. In addition, the banking company managed to resume its capital distributions with a dividend of 0.57 pence per share driven by Group's strong capital position.
It is important to note that the entire banking industry has been preparing itself for the defaults linked to the Covid-19 crisis. The banks are already under the pump as the revenue streams are hit by all-time low interest rates regime. Notably, shares of Lloyds Bank have delivered a solid return of 12.52 per cent on the YTD scale.
