HSBC has fired many investment bankers on the same day they were expecting to learn about their bonuses—but instead of receiving their payouts, they were let go without any bonuses at all. This shows that HSBC is taking a much stricter approach to cutting costs under its new CEO, Georges Elhedery.
HSBC Holdings plc is a British multinational bank and financial services company headquartered in London, England. Originally founded as The Hongkong and Shanghai Banking Corporation, it has strong historical and business ties to East Asia. HSBC is the largest Europe-based bank by total assets under management (AUM), surpassing BNP Paribas, with US$3.098 trillion as of September 2024. Globally, it ranks as the 7th largest bank by AUM, behind Bank of America, and is the 3rd largest non-state-owned bank in the world.
The London-based bank informed employees in its UK investment banking division last month that they were losing their jobs. This decision came after HSBC announced in January that it would shut down parts of its investment banking business outside Asia and the Middle East, including mergers and acquisitions advisory and equity capital markets.
According to people familiar with the situation, the layoffs happened just when employees expected to receive their 2024 bonus figures. However, vice presidents and other senior-level bankers who were fired as part of this restructuring received no bonus at all.
One insider described the decision as surprising, saying, “It’s very unlike HSBC,” because the bank has always had a reputation for taking care of its employees. HSBC declined to comment on the situation. Other banks sometimes offer at least a small bonus to employees being laid off, but HSBC did not do so.
Since becoming CEO in September, Elhedery has focused on reducing costs. HSBC recently announced plans to save $300 million (€280 million) in 2025 and cut $1.5 billion from its yearly expenses by the end of next year.
Elhedery had even considered shutting down investment banking operations in Asia and the Middle East but decided against it because this part of the business helps HSBC maintain strong relationships with important clients. The bank has, however, laid off some investment bankers in Hong Kong. In general, HSBC makes most of its money from commercial and retail banking, while investment banking plays a smaller role.
As part of a larger reorganization, Elhedery has also merged two of HSBC’s three main divisions, eliminated some high-level banking positions, and restructured operations into “eastern markets” and “western markets.”
Some employees had expected layoffs but still thought they would receive a portion of their bonus for the work they had done the previous year. However, HSBC has been under pressure to cut costs, especially as its earnings from interest rates have started to decline. Interest income accounts for nearly half of HSBC’s total revenue, but it fell last year.
Meanwhile, HSBC has proposed a pay package for Elhedery that could be worth up to £15.3 million—and if the bank’s stock price rises by 50%, his earnings could increase to £19.8 million. This gives him a strong reason to focus on boosting the company’s share price. If he receives the full amount, he will earn much more than his predecessor, Noel Quinn, who made £10.6 million in 2023—almost double what he earned the previous year, mainly due to a long-term incentive plan payout.
