HSBC expects cost-cutting drive to hit less than 8% of global headcount
It aims to remove duplicated roles at the more senior levels
HSBC chief executive officer Georges Elhedery has said that the impact on the bank’s global headcount arising from its drive to cut costs is likely to be under 8 per cent, as it focuses on generating 8 per cent in savings from salaries.
He said at a media conference call after the bank unveiled its earnings on Wednesday (Feb 19): “We’re not tracking headcount; what we’re tracking is the realisation of cost savings – we’re tracking this like hawks.”
The bank is homing in on removing roles that are duplicated, he noted, and added that many of these are at the more senior levels, involving staff with higher compensations. The percentage of jobs cut is therefore likely to come in lower than the savings.
The Asia-focused bank said that it aims to generate about US$300 million in cost reductions in 2025, and commits to an annualised reduction of US$1.5 billion in its cost base by the end of 2026.
These announcements follow Reuters’ report that HSBC had laid off around 40 investment bankers in Hong Kong. The bank’s annual report, also issued on Wednesday, put its global staff strength as at last Dec 31 at 211,304 staff. That was down 4.3 per cent year on year.
While not commenting on the report on the job cuts in Hong Kong, Elhedery said that there would be layoffs in the city. Some of those would be roles supporting the mergers and acquisitions (M&A) and equity capital markets (ECM) businesses in Europe and the Americas – arenas HSBC has already said it would exit, he said.
He pointed out that the bank would retain capabilities in ECM for its operations in Asia and the Middle East. Asked how the bank would support its Asian clients in M&A activities in Europe and the Americas, he replied that HSBC wasn’t among the top 25 banks in US dealmaking and said: “We believe this business is not for us.”
China business “resilient”
Despite the US-China trade war, the HSBC chief said that growth in the bank’s China business “remains resilient”. He noted that HSBC, which serves mainly clients in wholesale businesses, remains the bank of choice for foreign companies operating in the world’s second-largest economy.
Turning to Hong Kong, he described the bank’s outlook as “positive”, given its vast real estate sector; interest rates there are about to fall, and the government relaxed the housing rules last October. With its currency pegged to the US dollar, Hong Kong follows the Federal Reserve’s interest rate trajectory, which hurt demand for property when the American central bank hiked borrowing costs aggressively between 2022 and 2023.
The distressed property sales in Hong Kong came under the spotlight when New World Development, one of the city’s prominent real estate developers, fell into turmoil. Run by the billionaire Cheng family, New World is said to have proposed using US$3.8 billion in additional properties as collateral to refinance bank loans maturing in 2027 and beyond. This came on the heels of another proposal to pledge assets valued at US$15.3 billion to refinance US$7.7 billion in loans maturing this year and the next.
HSBC’s chief financial officer Pam Kaur said that the bank has a “very strong loan book” to the sector, with 54 per cent secured.
Elhedery is also confident of HSBC’s wealth and personal banking business in Hong Kong, which drew 800,000 new customers last year. “We’re investing in wealth centres and relationship managers and product capabilities” in Hong Kong, and other large wealth hubs such as Singapore, the UAE, as well as China and India, he added.
The bank’s pre-tax profit in Singapore was about US$1.38 billion in 2024, a 27 per cent jump from 2023. That was driven mainly by a 145 per cent surge in pre-tax profit from the wealth and personal banking business.
Europe’s biggest bank had earlier reported that profit before tax rose 6.6 per cent year on year to US$32.3 billion in 2024, as income withstood the impact of falling interest rates. Analyst estimates compiled by the bank had pegged profit before tax at US$31.7 billion on average.
