HSBC is preparing to unveil $1.5bn of annual cost savings from chief executive Georges Elhedery’s radical overhaul of the bank.
Europe’s largest lender will lay out the figures for the first time on Wednesday, February 19, when Elhedery presents full-year results to investors.
It is expected to report $1.5bn in savings from the changes after one-time costs, according to two people familiar with the matter.
HSBC declined to comment.
Elhedery announced a sweeping reorganisation in October, weeks after taking the reins, to reduce duplication and help strip out costs from an organisation that has long had a reputation as a lumbering bureaucracy.
The chief executive said the plans would result in a “simpler, more dynamic and agile organisation”. The bank’s shares have risen 30 per cent since the announcement.
Central to Elhedery’s plans are changes to how the London-based group is organised. It now has individual units dedicated to its two core markets of the UK and Hong Kong, one unit focused on corporate and institutional banking, and another for international wealth and premier banking.
The reorganisation has meant meshing the commercial and investment banks, two of HSBC’s three divisions in its old structure.
Combining them has enabled Elhedery to reduce the number of bankers doubling up in different geographies — particularly in the senior ranks — and much of the belt-tightening so far has come from redundancies. He has cut the number of top managers by about half.
On Wednesday HSBC is also preparing to quantify the savings expected from Elhedery’s decision to withdraw from some non-core markets, a figure the two people put at about $1.5bn.
HSBC announced in January that it would withdraw from key parts of its investment banking business in the UK, Europe and the Americas, which caught many employees in those businesses off guard. It also decided to shut down its payments app Zing just a year after its launch.
The bank has acted swiftly to put Elhedery’s plan into action but is still wrangling with what to do with its operations in Mexico, people familiar with the discussions said.
HSBC has examined significantly scaling back its Mexico business as part of a broader review of its non-core retail operations, the Financial Times has previously reported.
The bank has been under pressure to control costs as a period of interest rate rises — which boosted the bank’s profits — comes to an end.
Its net interest margin, a key measure of lending profitability, fell in the third quarter of 2024. Its costs rose 2 per cent, partly due to inflation.
HSBC’s headcount has remained stubbornly high in recent years despite efforts by Elhedery’s predecessor to slim down the bank.
Former chief executive Noel Quinn had previously pledged 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.