HSBC Cuts Dozens of Analyst Jobs in Investment Banking Overhaul

HSBC Holdings Plc, Europe’s largest lender by assets, has this week eliminated more than two dozen analyst positions as part of a sweeping restructuring of its investment banking arm. Sources familiar with the matter report that these cuts, which hit research and macro-strategy desks hardest, underscore CEO Georges Elhedery’s commitment to streamline operations, redirect capital toward higher-returning businesses, and absorb an estimated US$1.8 billion in one-off charges over the next two years (The Economic Times, Reuters).

A New Direction Under Georges Elhedery

Since taking the helm in September 2024, Elhedery has moved aggressively to reshape HSBC’s global footprint. He has merged the bank’s commercial and investment banking divisions, spun off standalone businesses in its two largest home markets (the UK and Hong Kong), and shuttered much of its M&A and equity underwriting operations across the US, UK, and continental Europe. The latest round of analyst layoffs is the most visible sign yet of his strategy to pivot away from low-return, capital-intensive advisory work and into areas where HSBC has both scale and competitive advantage—namely, Asia-focused debt financing and private credit.

Details of the Analyst Reductions

According to people speaking on condition of anonymity, the cuts centered in London and other European financial hubs, but extended to HSBC’s research units in Dubai and Singapore. Among those departing was Steven Major, the bank’s Dubai-based global head of fixed-income research. In Europe, analysts covering currency, rates, and credit were let go as HSBC combined its macro-strategy functions across asset classes in an effort to break down silos and reduce overlapping roles.

Leadership Shifts in Research and Strategy

With the layoffs, HSBC has announced interim and permanent promotions to fill critical gaps. Murat Ulgen, previously global head of emerging markets research, will add “interim head of macro strategy” to his title. Equity-research desks will be jointly led by co-heads Eliot Camplisson and Raj Sinha, while longtime economist Janet Henry retains leadership of the global economics team. These moves aim to maintain continuity in client coverage even as headcount shrinks.

Financial Impact and Cost-Reduction Targets

Elhedery’s overhaul is projected to generate US$1.8 billion in restructuring charges by the end of 2026, with about US$300 million of those booked in 2025 alone (Reuters). Beyond upfront severance costs, the bank targets US$1.5 billion in annualized cost savings by that same year-end. The freed-up capital will be redeployed into high-growth, high-margin businesses—principally, debt underwriting, private-credit financing, and wealth management in Asia.

Market Reaction: Shares and Sentiment

Despite the disruptive nature of these cuts, HSBC’s share price has rallied over 10 percent year-to-date in London, outperforming several European peers. Investors have broadly welcomed Elhedery’s no-nonsense approach, viewing the retrenchment as necessary to secure a sustainable return on tangible equity (RoTE) forecast in the mid-teens from 2025 through 2027. Analysts at Citigroup, however, caution that actual restructuring costs could exceed current estimates, potentially limiting future capital-return programs such as share buybacks.

Expansion into Private Credit

One of the most consequential strategic shifts has been HSBC’s formal entry into the private-credit space, a global market now estimated at US$1.6 trillion. In April 2025, the bank consolidated its capital-markets and advisory businesses to create a dedicated “Private Credit and Financing” division, with the aim of leveraging its distribution network in Asia and the Middle East to originate and distribute loans outside the traditional bond market. This move aligns HSBC with peers such as Goldman Sachs and JPMorgan Chase, which have all beefed up private-credit capabilities amid dwindling opportunities in public markets.

Geopolitical Headwinds and Asia-First Focus

HSBC’s pivot to Asia comes amid escalating US-China tensions and a global tariff war that threaten trade finance volumes and currency-hedging revenues (Financial Times, Reuters). With approximately two-thirds of its profits derived from the Asia Pacific region, the bank is doubling down on relationships with sovereign wealth funds, pension plans, and family offices across Southeast Asia, India, and the Gulf. Elhedery consistently emphasizes that HSBC’s unique East-West franchise, with dual listings in Hong Kong and London, positions it to capture cross-border flows that competitors cannot easily replicate.

Broader Industry Context: Rising Tide of Cuts

HSBC’s job reductions echo a broader trend in global finance: banks are slashing headcounts to offset margin pressure and digital disruption. In recent months, Deutsche Bank, Lloyds, and UBS have announced similar layoffs in sales, trading, and research teams (Financial News London). While some cuts have been concentrated in Europe’s under-capitalized markets, others extend to the US, where regional lenders such as Wells Fargo and Citigroup have pared back M&A and capital-markets units in favor of fee-generating services like transaction banking and wealth management.

Employee Perspectives and Talent Retention

Amid the upheaval, morale in HSBC’s sell-side research units has understandably dipped, according to insiders. Yet, industry recruiters note that compensation levels in top-tier banks remain unmatched, and many professionals are willing to accept job insecurity for the chance to work on high-impact, marquee transactions. The bank has rolled out retention packages for senior analysts in core Asian hubs, including Hong Kong and Singapore, to stem the tide of attrition to private-equity firms and boutique advisory shops.

Balancing Short-Term Pain with Long-Term Gain

While Elhedery’s restructuring incurs steep upfront costs and disrupts established workflows, the strategy aims to deliver a leaner, more profitable bank by 2027. A mid-teens RoTE target and an annualized cost-base reduction of US$1.5 billion are ambitious but achievable, given HSBC’s scale and network. Market strategists argue that failure to adapt quickly would leave HSBC over-exposed to cyclical downturns in capital markets—an outcome shareholders are keen to avoid.

Regulatory and Governance Considerations

HSBC’s board of directors has publicly backed Elhedery’s plan, even as chairman Mark Tucker prepares to retire by year-end after an eight-year tenure. Regulators in Europe and Hong Kong are monitoring the bank’s risk-management practices closely, particularly around credit underwriting and the handling of distressed private-credit assets. HSBC has pledged to maintain robust capital buffers and liquidity ratios, ensuring it meets Basel III requirements even as it reallocates resources.

Looking Ahead: What’s Next for HSBC?

Analysts will be watching HSBC’s full-year 2025 results, due in February, for signs that cost savings and redeployment strategies are taking hold. Key metrics to watch include fixed-income and foreign-exchange revenues, private-credit origination volumes, and wealth-management net new assets in Asia. Some investors believe the bank could announce further asset-sales in non-core regions—such as its remaining stakes in Latin America—to bolster capital and sharpen its focus on growth markets.

Conclusion: A Bank in Transition

HSBC’s decision to cut over two dozen analyst roles is more than just a headcount adjustment—it reflects a fundamental reorientation of the bank’s business model under CEO Georges Elhedery. By embracing cost discipline, concentrating on thriving Asian markets, and entering lucrative private-credit and wealth-management arenas, HSBC aims to write a new chapter in its storied history. For analysts, traders, and clients alike, the message is clear: adapt swiftly or be left behind in a banking world that prizes focus, agility, and high returns.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

27th May, 2025