HSBC’s Biggest Shake-Up in Years What It Means for Banking

Dear Reader,

HSBC is making its most dramatic cost cutting push in years, aiming to save $1.5 billion annually by 2026. But this overhaul isn’t just about efficiency, it's a complete strategic shift that could reshape global banking.

With the bank’s $1.8 billion restructuring plan in motion, jobs are being slashed, investment banking is shrinking in key regions, and HSBC is doubling down on Asia. The question is... will this gamble pay off, or is the bank cutting too deep?

Breaking Down HSBC’s Overhaul

The bank’s strategy under CEO Georges Elhedery is clear cut costs, refocus on high growth markets, and prioritize wealth management over traditional investment banking.

Here’s what’s happening:

• Massive workforce reductions HSBC has already begun cutting thousands of jobs, particularly in Europe and the Americas.

• $1.5 billion in annual savings targeted by 2026, with an initial $300 million cut this year.

• A $2 billion share buyback program has been announced, signaling confidence despite restructuring risks.

Focus on Asia HSBC, is betting big on expanding private banking, transaction services, and digital finance in key Asian markets.

These moves reflect a broader trend in banking, traditional investment banking is shrinking, while digital services and wealth management are on the rise. HSBC’s leadership believes that shifting its focus now will position the bank for long-term stability.

Why Investors Are Watching Closely

Despite major changes, HSBC’s financial performance remains strong. The bank posted a 6.6% increase in pre tax profits for 2024, reaching $32.3 billion beating analyst expectations.

Bank of America has raised its price target on HSBC stock from 960 to 1035 pence, citing confident leadership and cost cutting efficiencies as key drivers. Analysts believe that HSBC’s restructuring could lead to higher returns for shareholders in the long run.

However there are significant risks to consider:

• Cutting investment banking, could weaken HSBC’s global influence compared to rivals like JP Morgan and Goldman Sachs.

• Regulatory challenges in China and Hong Kong could slow down HSBC’s ambitions in the region.

For now, the market appears cautiously optimistic, if HSBC can execute this overhaul without disrupting operations, it could become a major leader in the future of global banking.

What comes next?

The next 18 months can be critical for HSBC. Investors will be watching how well the bank manages its cost cutting initiatives, whether its Asian expansion delivers growth, and how its profitability compares to global competitors.

One thing is clear, this is one of the biggest shake ups in banking today. HSBC is taking a bold approach, and whether it succeeds or stumbles will have ripple effects across the financial industry.

More updates coming soon.

Stay informed,

Street Fin Gazette