Newly appointed "Three Fires" for the new CEO of HSBC? It is reported that the new CEO of HSBC is brewing a $300 million layoff plan, targeting senior executives

HSBC's new CEO, Georges Elhedery, has set his sights on the top management since taking office, planning to reduce costs through restructuring and layoffs.

According to sources cited by the Financial Times on Thursday, Elhedery plans to merge the Commercial Banking and Global Banking and Markets divisions, and cut some senior management positions, expecting to save as much as $300 million through this restructuring.

This is the first step in cost-cutting since he took office last month. Employees have not yet received detailed information about the plan, but preparations are in the final stages, with an announcement expected by the end of October.

Targeting Top Management

"The (merger) will reduce senior management positions," a person familiar with the draft plan told the Financial Times, "This will affect senior executives and some larger positions, which are also where costs lie."

The bank has about 214,000 employees. One source said that one of the options being considered is to have Surendra Rosha, Co-CEO of the bank's Asia-Pacific business, in charge of Commercial and Global Banking, and Patrick George, head of Global Markets and Securities Services, in charge of Market operations.

Barry O'Byrne, head of Commercial Banking, has been transferred to head Wealth and Personal Banking at HSBC, with no replacement appointed yet. Greg Guyett has been leading Global Banking and Markets since October 2022.

The bank is also looking for a new CFO to succeed Elhedery, who took over as CEO in September from Noel Quinn. Two people familiar with the process said that the current Chief Risk and Compliance Officer, Pam Kaur, is the frontrunner.

Despite the significant restructuring, the expected $300 million in savings represents only 1% of the bank's total costs of $32 billion reported last year.

The costs of the two departments planned for merger have been increasing this year. In the first half of this year, costs for the Commercial Banking division (including loans to small and medium-sized enterprises, trade finance, and payment services) rose by 12% to $3.9 billion.

Costs for the Global Banking and Markets division (including investment banking, market services, and other multinational corporate services) increased by 3% to $4.9 billion.

According to HSBC's half-year report, in the first half of this year, the investment banking business accounted for only 6% of the total revenue of the bank's Global Banking and Markets division, representing 1.5% of the bank's total global revenue of $37.3 billion during the same period.

Three sources familiar with the bank stated that the departmental restructuring is dampening morale within the various departments, with senior executives awaiting their fate.