HSBC’s new chief executive is reportedly drawing up cost-cutting plans that could save Europe’s biggest lender up to $300m (£229m) by reducing top management layers.
Georges Elhedery, who took over from Noel Quinn on 2 September, is weighing measures including merging HSBC’s commercial banking unit with its global banking and markets unit, the Financial Times reported.
The merger is reportedly expected to reduce layers of upper management, affecting senior bankers and some of the larger roles as the 214,000-employee bank seeks to eliminate duplication in its top ranks.
An announcement is likely to be made before the end of October, it was reported. HSBC is due to report its third-quarter results on 29 October.
It was said that the bank is considering putting Surendra Rosha, co-chief executive of its Asia-Pacific business, in charge of commercial and global banking and Patrick George, global head of markets and securities services, in charge of the markets business.
HSBC declined to comment when approached by City A.M.
The London-based giant has enjoyed a massive earnings tailwind from higher interest rates in recent years, reporting a record a pretax profit of $30.3bn (£24.0bn) in 2023.
However, HSBC is now facing the prospect of lower profits as central banks across the world lower borrowing costs.
While Elhedery’s vision could be see a disruptive restructuring, savings of $300m (£229m) would only amount to a fraction of HSBC’s reported costs of $16.3bn (£12.5bn) in the first six months of 2024, which were up five per cent year on year.
Rising costs have added pressure on HSBC to consider how it manages expenses. Analysts have said the bank must reduce costs by around $2bn (£1.5bn) over the coming years to maintain its current efficiency ratio, a key measure of profitability.
Under Quinn’s leadership, HSBC slashed its global footprint in a pivot to focus on Asian markets where it has scale. The lender exited retail markets in the US and France, while offloading its banking operations in Canada and Argentina entirely.
Elhedery has so far overseen the sale of HSBC’s German private banking arm to French lender BNP Paribas, signalling his continuation of this strategy.
Shortly before he took the reins, HSBC announced the departure of three top executives as part of sweeping changes to the bank’s management following a review by Elhedery. Those changes took effect at the start of this month.
Elhedery has reportedly considered further shake-up to HSBC’s management, including cutting the number of country heads operating across its global network.