By Paul Clarke

Of Financial News

HSBC is cutting hundreds of jobs from its investment bank in Europe as the U.K. lender looks to reshape its business under chief executive Georges Elhedery.

The bank has been informing staff in its London office of the job cuts in recent days, with dealmakers being told of redundancies from Feb. 20-24 as HSBC pulls back from some investment banking functions, according to people familiar with the matter.

While discussions are ongoing, bankers told Financial News that they expect between 200 and 300 front-line roles in the London investment bank to go in the short term, plus more from support functions such as legal and compliance.

HSBC is shuttering M&A and equity capital markets in the U.K. and Europe, while it is also cutting jobs in sector teams, with up to 70% of roles at risk in some units.

It is also cutting jobs beyond the planned divisional closures, with some roles in leveraged finance put at risk, according to the people.

An exact number of job losses remains difficult to ascertain as some bankers are being offered the option to move to new positions in either the Middle East or Asia, while others have been given an opportunity to stay on a temporary basis to close out some remaining deals.

Some M&A bankers are also being offered the chance to stay into next year as they look to close out deals.

Meanwhile, local labour laws in European countries outside the U.K. mean redundancy processes can move slowly.

A spokesperson for HSBC declined to comment on the number of roles at risk.

"We remain committed to supporting clients globally with our best-in-class debt financing capabilities, leveraging our expertise in debt capital markets and leveraged acquisition finance, complemented by corporate risk solutions and strategic equity and financing, and M&A and ECM in the Middle East and Asia," said an HSBC spokesperson.

Much of HSBC's 50-strong U.K.-focused investment banking team, which includes M&A, ECM and corporate broking, is likely to be cut, according to people familiar with the matter. Its broader ECM unit, which comprises more than 40 bankers, is also largely being scaled back, with the exception of some senior bankers with global mandates.

Meanwhile, around 20 sector-focused dealmaking teams are being significantly cut back. In some cases, just a handful of bankers focused on corporate banking transactions are being retained.

HSBC has been reluctant to provide an overall number of job cuts as chief executive Georges Elhedery looks to reshape the bank around four key divisions. Instead, the bank said it will book $1.8 billion in costs largely related to severance as it simplifies its operations.

The overall reductions are likely to be significant, however, with a target of 8% of employee costs set to be cut across the bank. Elhedery told journalists during its full-year results call that more senior positions will be targeted as it looks to remove duplication of roles.

Its newly-created corporate and institutional banking unit--a combination of its commercial and global banking divisions--is likely to feel the brunt of cuts as the two units overlap in some areas, he added.

HSBC bankers in London were asked to work from home on Feb. 21 as the bank moved to make some deep cuts to M&A, equity capital markets and sector dealmaking teams. Some bankers affected by the cuts were told over a brief Zoom call, the people said.

Bankers told FN that some employees had discussions around bonuses booked in their diaries for Feb. 24, with many taking that as a sign that they still had a job.

Meanwhile, headhunters told FN that they have been inundated with calls from HSBC bankers looking for new roles even if they are kept on after the cuts. Many will wait until bonuses are paid out in March, they said.

HSBC is shuttering its ECM and M&A businesses in the U.K., Europe and Americas as it looks to refocus its investment banking unit on the Middle East and Asia. The bank said that these divisions generate around $300 million in revenue and "are not materially profitable."

Nonetheless, HSBC's retreat from investment banking comes after years of investment and contraction where it has tried unsuccessfully under several leaders to catch up with Wall Street rivals and gain more M&A work.

HSBC has been a strong player in debt capital markets for years, but has struggled to make the move up to the C-suite for more strategic deals. Its investment bank will now focus on DCM and leveraged finance, as well as Asia and the Middle East, where it has a strong position.

Elhedery also said that the bank was "finalizing a review" of other investment banking units including its equities sales and research function, but did not "expect the same size benefits" as its M&A and ECM retreat.

Financial News is owned by News Corp, the parent company of The Wall Street Journal and Dow Jones Newswires.

Write to Paul Clarke at paul.clarke@dowjones.com

Website: www.fnlondon.com

(END) Dow Jones Newswires

February 26, 2025 08:15 ET (13:15 GMT)

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