HSBC to revamp investment bank to look more like Citi

HSBC is reportedly reshaping segments of its investment banking arm, following in the footsteps of rivals like Citigroup.

Europe’s biggest bank is merging several of the industry coverage groups within its global banking business, Bloomberg News reported, citing unnamed sources.

It was said that the changes would enable bankers to work more efficiently.

“Servicing our clients is our priority and therefore ensuring we have the right people in the right places,” an HSBC spokesperson commented. “These groups underline our client focus and alignment.”

The reported moves echo those made by Wall Street giant Citi, which has combined a number of its sector groups in recent years.

In one instance, Citi established a “super group” focusing on technology and communications firms, while another spans across covers healthcare, consumer and retail companies.

Three years ago, Citi merged its energy, power and chemicals coverage units to create a new natural resources team.

The news comes as HSBC prepares for global interest rates to start falling from fresh highs in recent years, with central banks’ loosening of monetary policy set to weigh on the profits of global banks.

It was previously reported this month that HSBC was slowing down hiring and encouraging its investment bankers to rein in some expenses as part of efforts to cut costs.

The European Central Bank became the west’s first major central bank to lower rates last month, with the Bank of England expected to follow in August or September and the US Federal Reserve after that.

Rate hikes propelled HSBC’s pretax profit to a record high of $30.3bn (£24.0bn) last year, soaring 78 per cent from 2022. However, its profit ticked down in the first quarter of 2024 and a further fall in profit is expected in HSBC’s second-quarter results, due later this month.

Analysts expect HSBC to post a revenue of $16.1bn (£12.6bn) for the second quarter, which would mark a 4.9 per cent fall compared to the same period last year

The group’s investment banking arm has also grappled with a global slump in dealmaking and capital markets activity in recent times, with the Asia-focused lender particularly exposed to China’s sluggish economic recovery from the Covid-19 pandemic.

HSBC’s chief executive Noel Quinn is trying to bolster the company’s finances before stepping down from his role by the end of next April. The bank is aiming to unveil his successor in the coming weeks.