HSBC Holdings Plc is poised to commence a new phase of job reductions within its investment banking division, reflecting an ongoing effort to restructure operations and lower expenses under the leadership of CEO Georges Elhedery.
The initial round of layoffs will take place in Asia starting Monday, with a broader implementation of reductions anticipated across the global workforce in the foreseeable future.
Elhedery’s Restructuring Strategy
Since assuming the role of CEO in September 2024, Elhedery has enacted substantial cost-cutting measures, including:
- Merging the commercial banking division with the global banking and markets unit.
- Withdrawing from certain underwriting and advisory operations in both Europe and the Americas.
- Streamlining the executive committee by reducing its size by one-third.
According to a report from Bloomberg in December, over 40% of HSBC’s top 175 managers are projected to be affected by these leadership adjustments, with final decisions expected by June.
A representative from HSBC stated in response to a Bloomberg inquiry, "As announced in October 2024, HSBC is dedicated to enhancing leadership and market share in areas where it possesses a distinct competitive edge and significant growth potential."
Analysts forecast that the bank will achieve a pre-tax profit of $31.7 billion for 2024, representing a 4.6% increase from the previous year. Despite the looming layoffs, HSBC’s stock rose by 0.5% on Thursday morning, hitting a seven-year high during trading in Hong Kong.
Addressing Employee Concerns Amid Transition
HSBC’s retreat from equity underwriting and advisory services outside its primary markets in Asia and the Middle East has resulted in uncertainty among dealmakers in the region. Many employees are exploring opportunities with competing firms and are anxious about the potential loss of cross-border M&A advisory from Asia to Europe and the U.S., as well as leading roles in U.S. listings of Chinese companies.
In light of these concerns, veteran dealmaker Matthew Ginsburg has sought to reassure staff that although there will be changes impacting Asia, the region remains a pivotal focus for HSBC. Management has also promoted the transition of the bank into a boutique dealmaker equipped with a strong balance sheet. This shift is expected to leverage HSBC’s extensive corporate and institutional banking relationships in the West, which will be crucial for securing deals in both Asia and the Middle East.