Today’s news in brief
HSBC targets $1.8bn in cost cuts by 2026
HSBC announced plans on Wednesday to cut $1.8bn in costs by the end of 2025 as it revealed the impact of chief executive Georges Elhedery’s strategic overhaul of the banking group alongside the release of its full-year earnings report.
The bank plans to reallocate around $1.5bn from “non-strategic activities” to areas where it holds a competitive advantage. It expects these measures will result in upfront costs of $1.8bn, including severance packages, across 2025 and 2026.
HSBC reported a pre-tax profit of $32.3bn for 2024 which exceeded analyst forecasts, and announced a new $2bn share buyback. For the final three months of 2024, pre-tax profit came in at $2.3bn, up $1.3bn year on year.
Since taking over as chief executive in September, Elhedery has launched a sweeping restructuring of the Asia-focused bank.
This includes reorganising HSBC’s operations into “eastern” and “western” divisions, shutting down key segments of its investment banking business, and merging two of its three main units.
As part of these changes, Elhedery is aiming to significantly reduce management layers within the bank, which include an 8 per cent reduction in personnel expenses over 2025-26.
“I have put in place a smaller, core team of exceptionally talented leaders driven by a growth-orientated mindset and a firm focus on dynamically managing our costs and capital . . . we look to the future with confidence and clarity of purpose,” Elhedery said in a statement.
Santander to invest $2bn in Mexico
Santander plans to invest more than $2bn in Mexico over the next three years, the Spanish banking group’s executive chair Ana Botín said on Tuesday.
The investment will support the bank’s digital platform, Openbank, as well as Santander’s core banking operations in the country.
Speaking at an event in Mexico City, Botín stressed Mexico’s importance to the group: “Mexico is the country where we see the greatest growth potential,” she said, adding that it is one of the countries where the company is “going to continue investing the most from now on”.
The announcement followed a meeting between Botín and Mexican President Claudia Sheinbaum, who disclosed the investment earlier in the day without providing further details.
Santander’s Mexican subsidiary is among Mexico’s largest banks and this latest investment builds on the bank’s previous commitments to the country.
In 2003, under former President Andrés Manuel López Obrador, Santander pledged to invest $500mn annually in Mexico until 2025.
US FDIC cuts 170 probationary jobs despite shortage concerns
The US Federal Deposit Insurance Corporation has terminated around 170 probationary employees in the latest round of job cuts at the key US banking regulator, as reported by Bloomberg Law on Tuesday.
“The FDIC finds that you have not demonstrated that your further employment at the FDIC would be in the public interest,” said a letter to one of the affected employees obtained by Bloomberg Law.
No further reason for termination was provided, despite federal regulations typically requiring agencies to specify a cause when dismissing probationary employees.
The terminations follow the departure of around 500 FDIC employees who accepted the Trump administration’s offer of deferred resignation buyouts, in a move the agency confirmed last week.
The cuts come despite concerns over staffing shortages at the 6,000-person agency.
An internal review of Signature Bank’s 2023 failure found that frequent vacancies and high staff turnover at the FDIC had weakened oversight in the lead-up to its collapse.
Additionally, a 2023 report from the FDIC’s inspector general warned that 38 per cent of the agency’s workforce would be eligible for retirement by 2027, a rate much higher than the government average.
Other US banking regulators are also facing significant staffing cuts. The National Treasury Employees Union said in a court filing last Thursday that acting Consumer Financial Protection Bureau chief Russell Vought is planning a “mass lay-off” that could result in the loss of up to 95 per cent of the agency’s workforce.
HSBC announces Bahrain retail assets sale
HSBC has announced the sale of its retail assets in Bahrain to Bahrain Bank of Kuwait, confirming a report by The Banker that it was exiting the market after 81 years.
The deal includes the transfer of all retail loans, deposits and accounts of approximately 76,000 HSBC Bahrain customers, and is expected to be completed in the fourth quarter of 2025. The valuation of the transaction has not been disclosed.
Active in the Middle East since 1889 — when it was known as the Imperial Bank of Persia — HSBC opened its first branch in Bahrain in 1944, its second market of entry in the six-nation Gulf Cooperation Council after Kuwait, which it entered two years earlier.
The Financial Times in December reported that the bank was reviewing its retail banking operations outside the UK and Hong Kong, as part of a wider drive to cut costs.
HSBC’s review of its Middle East banking portfolio predates this review; the bank exited Oman in 2023, after selling its local business to Sohar International Bank.
Citigroup in December 2022 announced the sale of its consumer business in Bahrain to Ahli United Bank as part of a retreat from consumer banking across 13 markets across Asia, the Middle East and Africa.
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