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HSBC is preparing to save $1.5 billion in annual cost costs from CEO Georges Elhedery’s thorough overhaul of the bank.
Europe’s largest lender will first list the data on Wednesday, February 19, when Elhedery provided full-year results to investors.
According to two people familiar with the matter, a $1.5 billion saving is expected in the change after one-time costs.
HSBC declined to comment.
Elhedery announced a full restructuring in October in the coming weeks to reduce duplication and help divest costs from organizations that have long had a reputation as a labor bureaucracy.
The CEO said the plans would lead to “simpler, more dynamic and agile organizations.” The bank’s shares have risen 30% since its announcement.
At the heart of Elhedery’s plan is a change in how organizations are organized by London-based organizations. Now it has separate units specifically targeting two core markets in the UK and Hong Kong, one focusing on corporate and institutional banking and the other for international wealth and prime minister banking.
The restructuring means reporting on commercial and investment banks, which are two of HSBC’s three divisions on its old structure.
Combining them allows Elhedery to reduce the number of bankers doubled in different geographical locations, especially among senior teams, and to date, most of the tight bonds of tightness have come from redundancy. He cut the number of top managers by about half.
HSBC is also preparing to quantify the expected savings from Elehedery’s decision to exit certain non-core markets, with the figures for the two being around $1.5 billion.
HSBC announced in January that it would exit a key part of its investment banking operations in the UK, Europe and the Americas, catching many of its employees in those businesses off guard. It also decided to close its payment app Zing one year after it was launched.
People familiar with the discussion say the bank has taken quick action to put Elhedery’s plan into practice but is still fighting for its operations in Mexico.
The Financial Times previously reported that HSBC had largely examined the expansion of its Mexican business as part of a broad review of its non-core retail business.
With a period of rising interest rates, the bank is under pressure to control costs (which promotes the bank’s profits) is about to end.
Its net interest margin is a key measure of lending profitability, down in the third quarter of 2024. Its costs grew by 2%, partly due to inflation.
Despite efforts by Elehedery’s predecessor to shrink the bank, HSBC’s employees have remained high in recent years.
Former CEO Noel Quinn had previously promised to reduce the number of full-time jobs to 200,000 by the end of 2023. At the end of September last year, it had 215,180 full-time employees.
