HSBC Investment Banking Cuts Amid Profitable Year Plans

Investors support efforts to shut down parts of HSBC’s investment banking operations. This comes as the new government’s push for fewer regulations raises expectations for a surge in capital markets activity. Four major shareholders, including two of the top 20, agree with last month’s decision to cut HSBC’s mergers and equity capital markets teams in the Americas and Europe, believing it makes sense as the bank focuses on its strongest investment banking businesses in Asia.

Earlier, HSBC had a massive presence in over 100 countries but has spent the past decade shrinking its global reach and leaving low-profit businesses behind.

HSBC CEO Retrenchment Strategy

As U.S. tariffs risk hurting the profits of major trade finance providers like HSBC, pressure is growing on CEO George Elhedery to redirect capital to Asian economies with strong regional trade prospects that may be less affected by global trade issues, according to investors. HSBC CEO Elhedery will share more details of the retrenchment strategy when the bank reports its full-year results on February 21, including cost savings from his restructuring, a bank insider said.

Alex Potter, investment director for European equities at HSBC and a top-30 investor said, “Geopolitics are making things tougher for many businesses that operate worldwide.” He also said that many foreign banks made multiple purchases over the last decades but none have achieved effective market share in US equity investment banking.

HSBC Set for Profitable Year Despite Investment Banking Cuts

HSBC CEO Elhedery’s business restructuring plans will be revealed along with the bank reports its full-year results on February 21, including cost savings from his restructuring, according to a bank insider. Unconfirmed reports suggest those savings could range from 1.2 billion to 3 billion pounds ($1.5-$3.8 billion), partly through additional cuts to management roles and units similar to those already eliminated, a second insider said. HSBC declined to comment.

The bank’s London-listed shares have risen 11.5% so far this year, following a 20% increase in 2024. Sajeer Ahmed, global equities portfolio manager at HSBC investor Aegon Asset Management, said he believes the company is carefully reviewing each business to achieve a sustainable return on tangible equity of about 16%. A forecast by the bank shows analysts expect full-year profits of $31.6 billion, slightly higher than the 78% jump to $30.3 billion in 2023.

HSBC Stock Update

HSBC stock has seen some volatility in recent weeks. The share price reached a 52-week high of 882.35 on February 12, 2025, but closed slightly lower at 869.70 on February 14, 2025.  This fluctuation could be attributed to several factors, including the cuts in HSBC’s investment banking operations. While the long-term impact of this strategic shift remains to be seen, the news may have created some uncertainty among investors, contributing to the recent price movements.