Photo Credit: Getty Images
HSBC announced plans on January 28, 2025, to wind down its mergers and acquisitions (M&A) and equities businesses across Europe and the Americas, marking its largest investment banking retrenchment in decades. The move accelerates the bank's pivot toward Asian markets, where it generates most of its profits.
HSBC Bank CEO Michael Roberts outlined the new direction in a staff memo, stating, "Our intention is to move to a more competitive, scalable, financing-led model." The bank will maintain focused M&A and equity capital markets capabilities in Asia and the Middle East while retaining its global debt capital markets and leveraged acquisition finance operations.
This restructuring comes under the leadership of CEO Georges Elhedery, who took the helm in September, replacing Noel Quinn. The decision reflects HSBC's ongoing evolution since the global financial crisis, during which it has steadily reduced its global footprint by exiting numerous low-returning consumer banking operations across multiple countries.
The bank's current position in global investment banking has been challenging, ranking 14th in investment banking fees in 2024 with a market share of 1.5%, according to LSEG data. These revenues primarily came from its debt financing business, highlighting the struggles in other investment banking segments.
Market reaction to the announcement has been measured, with HSBC shares showing a modest decline of 0.2% to 822 pence, valuing the bank at approximately £147 billion. Some analysts have praised the decision as a practical response to competitive challenges. Shore Capital analyst Gary Greenwood noted, "I've lost count of the number of times HSBC has been in and out of ECM in the UK. It never seems to succeed."
The timing of the restructuring has raised eyebrows among some observers, given expectations of increased capital markets activity driven by anticipated interest rate cuts and pro-growth policies. However, RBC Capital Markets analyst Ben Toms defended the move, stating, "The bank is being run with medium to long-term view. Geographically, the move reflects the continued shift from West to East, where growth and profitability are higher."
This strategic pivot follows similar moves by European competitors, with Deutsche Bank previously exiting equities and UBS scaling back certain trading operations. The exact scope of job cuts and potential cost savings remains undisclosed, though the bank's spokesperson confirmed the contents of Roberts' memo to staff, acknowledging the unsettling nature of the announcement for affected employees.
