What HSBC’s Cost Reduction Plan Will Look Like

HSBC announced that it will look to save $1.5 billion in annual costs by the end of 2026. CEO Georges Elhedery shared a glimpse of what the plan will look like. As part of the announcement of its 2024 annual results, HSBC set a target of saving $1.5 billion in annual costs by the end of 2026, including a $300 million reduction in 2025. According to the bank’s strategic report, this will be achieved primarily through job cuts which are expected to have a «negligible impact on revenues and are aligned to the strategic reorganization of the group». As a result, $1.8 billion of severance and other up-front costs will be incurred over the two years. Source of Job Losses The cost-saving plan will involve an 8 percent cut in staff expenses. Although HSBC did not specify the number of jobs that will be lost, CEO Georges Elhedery said during a media conference that this would translate to a reduction of less than 8 percent of the total headcount as the roles tend to be more senior with higher compensation. And they will be mostly based in London. «We are targeting, in general, roles that are duplicated through either the removal of matrix management in large areas of the bank or duplicated because of the synergies we can achieve by merging our two wholesale businesses,» Elhedery said. «You have to expect that more of the weight will be borne by the head office, specifically in the UK.» As of end-2024, the bank housed 211,304 full-time employees, down 9,557 compared to the previous year. Strategic Redeployment Another $1.5 billion of costs will also be redeployed over the medium term from «nonstrategic activities» to opportunities with «clear competitive advantage and accretive returns», the bank added in its strategic report. According to Elhedery, these opportunities include HSBC’s wealth business, especially in Asia, transaction banking and business banking in the UK. «Together, these actions give us the confidence to target a mid-teens return on tangible equity for each of 2025, 2026 and 2027,» he added. Execution is Underway HSBC has already been making efforts to realize its cost-saving ambitions. In October 2024, it announced a global restructuring from what it calls a «complex matrix governance structure» of three business lines and five geographical regions to four new units: corporate and institutional banking, international wealth and premier banking, Hong Kong and the UK. More recently, the bank announced that it would begin to wind down its M&A and equity capital markets activities in the UK, Europe and the US. Asia has not been unscathed with 40 investment bankers being laid off in Hong Kong, according to a «Reuters» report, mostly in the consumer, real estate, resources and energy sectors, as well as M&A. In 2024, HSBC’s pre-tax profit rose 6.6 percent year-on-year to $32.2 billion.