HSBC Cutting Top Managers in $300 Million Savings Plan

Management ranks at banking giant HSBC could soon begin to thin.

The Financial Times (FT) reported Thursday (Oct. 10) that sources familiar with the matter say new CEO Georges Elhedery plans to restructure HSBC’s senior banker level as part of a plan to save up to $300 million.

Reports emerged last month that Elhedery is working on an effort to combine HDBC’s commercial banking operations with its global banking and market business. This merger would create a combined vision with a staff of 90,000, and would be HSBC’s largest source of revenue, bringing in $40 billion annually.

According to the FT report, while staff haven’t been provided with details of the plans, preparations are advancing, with an announcement expected by the end of the month.

Reached by PYMNTS, HSBC declined to comment.

“[The merger] will reduce the top management layers,” one of the sources told the FT. “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.”

However, the report notes that the $300 million target represents just 1% of the $32 billion in costs the U.K.-based multinational bank reported in 2023.

“A lot of the back-office functions are already consolidated” between the two units, another source 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.”

Costs to the two units have risen, up 12% to $3.9bn in the commercial banking division — which includes lending to small and medium-sized businesses, trade finance and payments services — in the first six months of 2024.

Meanwhile, HSBC is also seeking a new chief financial officer. That job had been held by Elhedery until he took over from Noel Quinn as CEO last month. Sources say that Pam Kaur, chief risk and compliance officer, is a frontrunner to become CFO.

In other HSBC news, the bank last week launched an embedded finance venture in partnership with B2B global trade network Tradeshift.

“Businesses are increasingly looking for seamless financial solutions that are embedded within their e-commerce journeys, so they can access these when and where they need them,” Vinay Mendonca, CEO of the new venture, said in a news release.

“SemFi by HSBC aims to deliver such embedded capabilities to help businesses grow. It will seek to bring the best of both worlds to our business customers and e-commerce partners; a startup technology mindset coupled with the global scale and expertise of an international bank.”