(Sept 9): HSBC Holdings plc is weighing combining its commercial and investment bank divisions as part of new chief executive officer Georges Elhedery’s push to eliminate overlapping roles across the company and shed expenses.

The effort would bring together HSBC’s global banking and markets business, which caters to large, multinational corporations and houses the firm’s trading and investment banking divisions, with its commercial banking arm, according to people familiar with the matter.

The combined division would become the bank’s largest revenue generator, contributing about US$40 billion (RM174.79 billion) a year to HSBC’s coffers and leapfrogging its wealth and personal banking business. It would also bring together a more than 90,000-person strong workforce to go out and win business with companies of all sizes.

No final decisions have been made and details of any potential restructuring could still change, the people said, asking not to be identified discussing non-public information. A spokesperson for HSBC declined to comment.

HSBC executives have considered a tie-up of the commercial and global banking divisions in the past, but the proposal was previously met with heavy internal resistance and former HSBC CEO Noel Quinn was opposed to the idea, according to some of the people familiar with the matter.

Quinn, who rose through the ranks of the commercial bank, has previously argued that combining the coverage teams of the two divisions would be too disruptive, the people familiar with the matter said. After Quinn’s departure earlier this month, the idea is being given a fresh look as the company hunts for ways simplify its business, the people said.

Elhedery has emphasised that he intends to continue Quinn’s strategy of pivoting the bank toward its core markets in Asia. The Lebanese-born executive even began his tenure as CEO in the bank’s Hong Kong offices, the bank’s most important market, rather than in London where the bank is headquartered.

Still, the fact that he’s toying with restructuring two of HSBC’s largest and most important businesses shows Elhedery is looking to make his own mark on the 159-year-old banking behemoth.

The combined unit would be home to about 92,125 employees in total, though some executives believe the tie-up could allow the bank to eliminate some duplicative back office roles, the people said.

Commercial banking, which has offerings for small and mid-size businesses in 50 markets, posted a profit before tax of US$13.3 billion in 2023, while the global banking and markets arm brought in US$5.9 billion. Wealth and personal banking, which caters to 41 million consumers around the world, generated about US$11.5 billion.

In one of his first moves as he was preparing to take the reins, Elhedery shifted Barry O’Byrne, who’s led the commercial banking business for four years, to oversee wealth and personal banking. He’s been replaced on an interim basis by Jo Miyake while HSBC carries out a formal recruitment process to find a successor for O’Byrne.

Another executive, Greg Guyett, has led global banking and markets for the last four years. Guyett previously spent nearly three decades at JPMorgan Chase & Co in a variety of roles across the lender’s investment bank.

Expenses in check

Elhedery’s deliberations come as HSBC has been looking to rein in expenses with central banks around the world beginning to cut interest rates, moves that threaten the margins of big, global lenders.

In his initial meetings with staffers, Elhedery has emphasised that staffers should seek to keep their expenses in check, Bloomberg previously reported. The bank has already started to slow hiring and asked bankers’ to be more judicious about their travel and entertainment spending.

The former chief financial officer has also considered plans that could remove layers of middle management at Europe’s largest bank, mirroring similar moves undertaken by rivals Citigroup Inc and Standard Chartered plc.

Combining commercial banking with global banking and markets would follow a similar move by JPMorgan earlier this year. There, CEO Jamie Dimon tapped Jenn Piepszak and Troy Rohrbaugh to lead an expanded commercial and investment bank, which included the firm’s commercial bank, investment banking, corporate banking, markets, securities services and global payments.

On the other hand, HSBC’s rival Citigroup recently broke up its so-called institutional clients group into three smaller units — a banking division, a markets unit and a services group — as part of CEO Jane Fraser’s ongoing revamp of the lender.

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