HSBC Holdings Plc is reportedly considering a major overhaul of its operations as it looks to combine its commercial and investment banking divisions. Bloomberg I will report.
This was announced by new CEO Georges El Hederi. Explore Plans to streamline operations by reducing layers of middle management
The potential restructuring, which El Hedery will spearhead, is aimed at streamlining the banking giant’s structure, eliminating redundancies and ultimately cutting costs.
The proposed combination could create HSBC’s largest revenue generating division, bringing in an estimated $40 billion in annual revenue and surpassing its current leader, wealth and personal banking.
Additionally, it will bring together more than 90,000 employees, enhancing the bank’s ability to serve businesses of all sizes.
HSBC executives have long considered the merger but faced resistance from within the bank, particularly from former CEO Noel Quinn, who worried about potential disruption to customer relationships.
Quinn’s recent retirementBut as banks look to simplify their operations, the door is open for a new look at this strategy.
While ElHedery has pledged to maintain Quinn’s Asia-focused approach, his willingness to explore such a major restructuring underscores his desire to put his own stamp on the 159-year-old institution.
The merger could result in a combined unit with approximately 92,125 employees.
But executives believe the merger could lead to further efficiencies by eliminating some duplication of back-office operations.
In 2023, the commercial banking division, which serves small and medium-sized businesses in 50 markets, generated pretax profit of $13.3 billion.
The Global Banking Markets segment generated revenue of $5.9 billion, while the Wealth and Personal Banking segment, serving 41 million customers worldwide, generated revenue of approximately $11.5 billion.
As he prepares to take over, ElHedery has initiated leadership changes, moving Barry O’Byrne from commercial banking to wealth and personal banking.
O’Byrne’s previous position is currently being held on an interim basis by Masashi Miyake.
ElHedery has also urged staff to be cost-conscious, slowing hiring and insisting on cutting travel and entertainment expenses.
While no final decisions have been made and details are subject to change, the potential move underscores HSBC’s efforts to adapt to a changing banking industry and drive operational efficiencies.
Featured Image Credit: Free Pick
