HSBC mulls merger of investment banking and commercial arms in cost-cutting drive

HSBC is mulling a merger of its investment and commercial banking arms as part of a push by new chief Georges Elhedery to slash costs, according to reports.

Elhedery, who took over as group CEO last week, is considering combining the lender’s global banking and markets arm with its trading and investment banking division, Bloomberg reported today, citing people familiar with the matter. 

If the bank was to press ahead with the tie-up, it would create HSBC’s largest division with combined revenues of some $40bn a year and around 92,215 people.

HSBC declined to comment.

The move forms forms part of a wider shake-up by Elhedery to strip out costs and reduce overlap between its divisions. The new chief is also reportedly looking to cut its headcount in middle management and reduce the amount of country heads running its global network.

He has looked to ease concerns of sweeping changes, however, and told staff he would build on the strategy laid out by his predecessor, Noel Quinn.

“Our strategy is working, and I’m committed to continuing to build on it,” Elhedery wrote in a memo to staff, seen by Reuters.

His appointment came amid a wider shake-up at the bank in its top ranks. Former global wealth head Nuno Mantos left the firm and was replaced by Barry O’Byrne, who heads the London-headquartered lender’s commercial banking business.

It is also said to be plotting a hiring spree in its UK wealth business in a bid to see off competition from domestic lenders.

Elhedery said in the memo to staff last week the bank was now able to accelerate the execution of its strategy and grow revenue on a “sustainable trajectory”, while maintaining “high ethical standards, prudent risk management and strong cost discipline”.