HSBC expects $2.4b revamp cost over next two years
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Job cuts are under way in HSBC’s markets division and wider layoffs at its investment bank will start as early as this week, media reports said.
PHOTO: AFP
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HSBC Holdings expects US$1.8 billion (S$2.4 billion) in costs over the next two years as it embarks on a global restructuring programme that has seen the lender shutter some of its businesses and slash management ranks.
Reporting fourth-quarter pre-tax profit of US$2.3 billion that beat estimates, Europe’s largest bank also said it expected to cut expenses by US$1.5 billion a year. It also announced a US$2 billion share buyback.
“Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy,” chief executive officer Georges Elhedery said in a statement on Feb 18. “We are creating a simple, more agile, focused bank built on our core strengths.”
With Mr Elhedery at the helm for roughly six months, HSBC has witnessed one of the biggest upheavals in more than a decade. He wound down some of the lender’s investment banking operations in Europe, the UK and Americas in a bid to focus on areas where it could “best serve” its corporate and institutional clients. The broad moves have also seen a slew of top executives heading for the exit.
Bloomberg News reported in December 2024 that HSBC was examining plans to cut costs by at least US$3 billion, equivalent to reducing its annual expense bill by about 10 per cent. Discussions over the scale of the cuts have been going on for months at the top level.
Days after taking over from Mr Noel Quinn as CEO, Mr Elhedery told a townhall meeting in Hong Kong that he would be focused on keeping a lid on costs. Six weeks later, he unveiled the revamp that also involved creating a new global commercial and institutional banking unit through the combination of two of the lender’s largest divisions, while splitting Hong Kong and the UK as standalone businesses.
Further management changes have followed, including the December 2024 announcement of the departure of Ms Annabel Spring, global head of private banking. Other senior managers have been forced to reapply for their jobs. “The process has been measured, thoughtful and fair,” Mr Elhedery said at the time.
The CEO has also set in motion plans for further asset sales and business closures, including a strategic review of the bank’s Maltese operations, sale of its South Africa corporate banking unit, as well as the closing of HSBC’s Zing payments app. In January, the bank said it would stop providing mergers and acquisitions and equity underwriting services in New York, London and continental Europe. BLOOMBERG
