HSBC To Cut Investment Banking Jobs To Improve Profitability

HSBC Holdings Plc (LON:HSBA) (NYSE:HSBC) is cutting senior investment banking positions as part of its ongoing plan to reduce costs and improve profitability. The company is also disposing unprofitable/non-core operations and focusing on other cost-curtailment efforts.

In February, HSBC had announced its plan to expand the global banking unit by merging it with its capital financing unit. The integration thereafter resulted in replication and overlapping of roles, which is now being removed through job cuts.

A major change to the company’s operational structure is the set up of a new Corporate, Financials and Multinational unit which brings together a range of investment banking, transaction banking and lending activities. Apart from helping in controlling costs, this unit is also expected to aid in expanding HSBC’s share in advisory services and equity capital markets.

“We have a global savings programme of $1.1bn in our global banking and markets business,” Mr. Samir Assaf, the CEO of HSBC Global Banking and Markets, said, “This programme will contribute tens of millions of this $1.1bn.”

In another operational restructuring initiative, the company is cutting back risk-weighted assets in the investment banking and trading unit by up to one-third.

As announced by HSBC last June, massive job cuts and restructuring plans are being adopted in order to cut down its expenses and improve its profitability position. The U.K. based global bank plans to slash nearly 22000-25000 jobs through branch closures and consolidation of IT and back office operations to result in a savings of $4.5-$5 billion by 2017.

The bank also announced a pay freeze in January but reversed the same due to hostile reaction from the staff. A hiring freeze, however, is still in place.

Currently, HSBC holds a Zacks Rank of #5 (Strong Sell). Some better ranked foreign banks are Bank of Montreal (TO:BMO) , Canadian Imperial Bank of Commerce (TO:CM) and Royal Bank of Canada (NYSE:RY) . All these banks hold Zacks Rank #1 (Strong Buy).


BANK MONTREAL (BMO): Free Stock Analysis Report

CDN IMPL BK (CM): Free Stock Analysis Report

ROYAL BANK CDA (RY): Free Stock Analysis Report

HSBC HOLDINGS (HSBC): Free Stock Analysis Report

Original post