Major Focus Shift to Asia and the Middle East with Plans to Streamline Investment Banking Services

HSBC Holdings is set to scale down its investment banking operations in Europe, the US, and the UK, as part of a broader restructuring initiative under CEO Georges Elhedery. The bank, Europe’s largest, will withdraw from providing equity capital markets and advisory services outside its core markets in Asia and the Middle East, according to an internal memo seen by Bloomberg News.

The company informed its employees that discussions with clients about the closure of investment banking businesses in the West would begin shortly. HSBC has committed to completing all live deals and ongoing mandates. The memo confirmed that the focus would shift to maintaining a more concentrated M&A (mergers and acquisitions) and equity capital markets presence in Asia and the Middle East, with plans to phase out these operations elsewhere.

To maintain staff motivation during this transition, HSBC is offering special incentives for employees whose roles will be phased out once current projects are concluded.

Since taking the CEO position in September, Elhedery has initiated a major revamp of HSBC, aimed at increasing competitiveness. Among the changes already made are the merger of commercial and investment banking operations outside of Hong Kong and the UK, alongside a reduction in senior management layers.

Elhedery’s latest move to cut back on investment banking activities comes after persistent investor concerns regarding HSBC’s ability to capture market share in the sector. Despite being one of the largest lenders globally, HSBC has struggled to establish itself as a leading player in investment banking, particularly in the West.

Moving forward, HSBC plans to focus on areas where it believes it can better serve its corporate and institutional clients. Michael Roberts, head of corporate and institutional banking, stated that the bank would shift to a more competitive, scalable model, focusing on debt capital markets, strategic equity finance, and leveraged acquisition finance.

The decision is also driven by the bank’s inability to compete with Wall Street giants in major financial hubs like New York, London, and continental Europe. As a result, HSBC will continue to offer debt underwriting and leveraged acquisition finance services but will scale back its other investment banking activities.

There is expected to be minimal impact on HSBC’s global market operations and innovation banking.

Several top executives, including Nuno Matos, who previously led the wealth and personal banking division, have left the company as part of the restructuring. Some employees within corporate and institutional banking have been warned to expect lower bonuses in 2025, with payouts expected to disappoint in the coming weeks.

While final job loss figures are yet to be determined, some staff will be reassigned to strengthen HSBC’s position in Asia and the Middle East. The bank hopes the restructuring will reduce expenses by at least US$3 billion (S$4 billion), representing about a 10 per cent cut in its expense base, which is projected at US$32.6 billion for the year.

Analysts at Bloomberg Intelligence have suggested that HSBC may intensify cost-cutting measures to further boost profitability, with significant cuts expected in the bank’s US$19 billion annual wage bill.