HSBC Holdings PLC (GB:HSBA) is reportedly targeting senior banker roles as part of its bold cost-cutting strategy. According to the Financial Times, the bank aims to save up to $300 million with this move as part of its ongoing restructuring efforts. HSBC shares lost 0.10% as of writing.
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HSBC Holdings is the largest bank in Europe by assets and serves approximately 42 million customers globally in 62 countries.
HSBC to Trim Costs with Restructuring Initiatives
HSBC CEO Georges Elhedery intends to focus on the bank’s high-cost tier of senior bankers as part of a restructuring effort aiming to reduce expenses. The bank welcomed Elhedery, its finance head, as the new CEO in September.
HSBC is now facing a potential decline in earnings as interest rates decrease, having previously reaped substantial benefits from higher rates in recent years. In the first half of 2024, HSBC reported a 7% year-over-year decline in its net interest income to $16.9 billion. Meanwhile, the net interest margin fell to 1.62% from 1.7% a year ago. HSBC’s restructuring efforts seek to remove redundancies among the senior management. The bank has 214,000 employees worldwide.
According to the Financial Times report, preparations are well underway, and an announcement is expected by the end of October. However, employees have not received specific details about the bank’s plans.
HSBC Considers Merging Banking Units to Reduce Costs
This news follows last month’s report by the Financial Times, which stated that HSBC has considered a plan to merge its commercial and investment banking divisions. This will combine two of its three segments in a significant cost-cutting initiative led by Elhedery.
In H1 2024, costs in both these divisions increased, with the Commercial Banking division experiencing a 12% rise to $3.9 billion. Additionally, in the Global Banking and Markets unit, which includes investment banking, costs rose by 3% to $4.9 billion during the same period.
Is HSBC a Good Stock to Buy?
According to TipRanks’ consensus, HSBA stock has received a Moderate Buy rating based on a total of 11 recommendations. It includes six Buy and five Hold recommendations. The HSBC share price target is 767.47p, which is 15% above the current trading level.
