HSBC Planning to Cut Top Bankers in Cost-Saving Plan
Banking giant HSBC is reportedly considering a round of cuts among senior managers with plans to save up to 300 million US dollars (£229 million). The new CEO Georges Elhedery is contemplating a merger of the commercial banking division with the investment banking arm as part of his new strategy. This move comes as Elhedery settles into his role as chief executive, taking over last month, as reported by the Financial Times.
The merger is expected to result in the reduction of roles among highly paid senior bankers in both divisions. An official announcement regarding these potential cuts is anticipated by the end of the month, although HSBC has not provided any immediate comment on the matter.
Prior to Elhedery assuming the CEO position on September 2, the company had already seen changes in its senior management. Notably, Barry O’Byrne, the former chief executive of the global commercial banking arm, transitioned to lead global wealth and personal banking. However, there has not been a direct replacement appointed for his previous role.
The proposed merger is aimed at eliminating duplicated roles within the commercial and investment banking arms. While the company is targeting substantial savings, these cuts would only make up a fraction of the group’s overall costs, which amounted to 16.3 billion dollars (£12.5 billion) in the first half of 2024.
During the bank’s half-year results announcement in July, Elhedery confirmed that major strategic overhauls were not in the works. Instead, he expressed intentions to expedite existing plans. HSBC had previously attempted to integrate certain back-office functions of commercial and investment banking, but these efforts were paused due to the pandemic.
Despite challenges, HSBC reported pre-tax profits of 21.6 billion dollars (£16.5 billion) for the first half of 2024, demonstrating stability compared to the previous year. The bank’s second-quarter results exceeded expectations, with a 1% rise in profits, enabling the unveiling of another 3 billion dollars (£2.3 billion) for share buybacks.