HSBC to cut senior bankers in US$300m cost-cut plan
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The news: HSBC is planning to cut up to USD300 million ($446.51 million) in costs by targeting its most expensive senior bankers, The Financial Times reported citing unnamed sources.
New CEO Georges Elhedery, who took the helm in September, is expected to announce the move later this month, the paper said.
The context: The restructuring, which will affect top management layers, is part of an ongoing effort that includes a plan to merge the commercial banking and global banking and markets units. The savings will come from reducing duplication in senior roles.
Although HSBC has benefited from higher interest rates in recent years, it faces falling profits and rising costs as rates decline.
The merger aims to streamline operations, though insiders told the FT the back-office functions were already consolidated.
The hoped-for USD300 million savings would amount to just 1% of the bank’s total USD32 billion costs last year.
What they said: “[The merger] will reduce the top management layers,” one of the sources told the paper. “It’s going to affect the senior people and some of the larger roles . . . That’s the most expensive layer and that’s where the costs are.”
“A lot of the back-office functions are already consolidated” between the two units, a second person close to the bank said. “Where it will hit is the duplicate management layers. In a country, there’s the head of the [commercial bank] and the investment bank, and going forward they will only need one.”
The source: The Financial Times
