HSBC Continues Cutting Costs with Potential Merger of Two Divisions

HSBC is continuing to cut down on costs by reportedly considering a merger of two of its three major divisions: commercial and investment banking, Bloomberg reports.

The merger would strengthen the bank’s new CEO Georges Elhedery’s initiative to eliminate overlapping roles across the company and cut expenses, accelerating the bank’s transition from restructuring to growth.

The proposal suggests merging the commercial banking arm, which serves small to medium-sized enterprises, with the global banking and markets business which focuses on large multinational corporations and specializes in trading and investment banking.

Should the proposed merger be completed, the combined division would become the bank’s largest revenue generator, contributing approximately $40 billion annually to the bank’s revenue.

The new unit would surpass the current wealth and personal banking in size, by creating a workforce of more than 90,000 employees. However, some executives believe the merger could allow the bank to implement some job cuts.

No final decisions have been made and details of any potential restructuring could still change.

The potential merger is the latest move from Europe’s largest bank to reduce costs and streamline operations, as it recently considered the sale of its South African business.

In recent years, HSBC has also shifted its focus from Western markets, such as the US, France, and Canada, to more profitable regions in Asia, amid growing geopolitical tensions.

As part of this strategy, the bank integrated Citi’s retail wealth management portfolio in mainland China, which consists of investment assets and deposits worth $3.6 billion, into HSBC Bank China’s wealth and personal banking operations.