HSBC Holdings is reportedly considering a major overhaul of its operations, exploring the merger of its commercial and investment banking divisions, Bloomberg reports.
This comes as new CEO Georges Elhedery explores plans to streamline operations by cutting layers of middle management
This potential restructuring, spearheaded by Elhedery, aims to streamline the banking giant’s structure and eliminate redundancies, ultimately reducing costs.
The proposed consolidation could birth HSBC’s largest revenue-generating division, contributing an estimated US$40 billion annually, surpassing the current leader, the wealth and personal banking business.
Furthermore, it would unite a workforce of over 90,000, amplifying the bank’s ability to cater to businesses of all sizes.
Although HSBC executives have previously contemplated this merger, it faced internal resistance, particularly from former CEO Noel Quinn, who expressed concerns about potential disruptions to client relationships.
Quinn’s recent departure, however, has paved the way for a fresh look at this strategy as the bank seeks to simplify its operations.
While Elhedery has committed to continuing Quinn’s Asia-centric focus, his willingness to explore such a significant restructuring underscores his intent to leave his own mark on the 159-year-old institution.
The potential merger could create a combined unit with approximately 92,125 employees.
However, executives believe this integration could also lead to the elimination of some duplicate back-office roles, further enhancing efficiency.
In 2023, the commercial banking division, which serves small and mid-size businesses in 50 markets, generated a pre-tax profit of $13.3 billion.
The global banking and markets division brought in US$5.9 billion, while wealth and personal banking, serving 41 million customers worldwide, generated about US$11.5 billion.
As Elhedery prepared to take the reins, he initiated leadership changes, moving Barry O’Byrne from commercial banking to wealth and personal banking.
O’Byrne’s former role is currently filled on an interim basis by Jo Miyake.
Elhedery has also urged staff to be cost-conscious, slowing hiring and advocating for reduced travel and entertainment spending.
While no final decisions have been made and details could change, this potential move underscores HSBC’s efforts to adapt to the evolving banking landscape and drive operational efficiency.
Featured image credit: Edited from Freepik
