HSBC Prepares for Major Restructuring; Senior Bankers Face Job Cuts

Georges Elhedery, the newly appointed chief executive of HSBC, is reportedly gearing up to implement significant changes within the bank by cutting some of its highest-paid senior bankers. This move is part of a broader strategy to save costs, potentially amounting to $300 million (£229 million), by merging its global banking and commercial banking units, Financial Times reports.

The planned restructuring, which remains undisclosed to the employees as of now, is expected to be announced later this month. As Europe’s largest bank, HSBC operates over 300 branches in the UK, and financial statements reveal the average employee earns £63,000 annually, including benefits. However, senior employees in the investment banking division earn considerably higher, with more than 512 regulated employees receiving over $1 million, and 41 of these surpassing $3 million annually.

Elhedery’s initiative, following his promotion from HSBC’s chief financial officer, aims to eliminate duplicative roles among the senior management, thereby optimizing operational efficiency. This restructuring follows the departure of Noel Quinn, who cited a desire for a better work-life balance after five intense years as CEO.

The cost-saving measures are a minor fraction compared to the bank’s $32 billion annual expenditure, which includes $17 billion in wages and salaries. Despite previous financial gains from higher interest rates boosting HSBC’s net interest income—the difference between earnings from loans and payouts to savers—analysts predict a decrease to $33 billion for the current financial year as base rates decline.

Additionally, HSBC recently faced financial setbacks, including a writedown of its stake in the Bank of Communications in China. Conversely, the bank has announced plans to expand its presence in the wealth management sector, striving to acquire a more substantial market share.

A source familiar with the restructuring plans told the Financial Times: “The merger will reduce the top management layers. It’s going to affect the senior people and some of the larger roles. That’s the most expensive layer and that’s where the costs are.” It’s reported that Surendra Rosha, co-chief executive of HSBC’s Asia Pacific business, may be considered for a central role in managing commercial and global banking.

The Guardian has reached out to HSBC for further comments regarding these strategic changes.