Just over a year ago, HSBC chief executive Georges Elhedery unveiled one of the most consequential parts of his grand restructuring plan: the creation of a financing powerhouse within the lender by combining its commercial banking and global banking and markets businesses.
With much of that integration now completed, HSBC’s new corporate and institutional banking division is the largest within the bank and boasts a near-$600bn balance sheet that Elhedery has said he wants to “churn” and “sweat”.
Michael Roberts, the American banker Elhedery parachuted in to oversee the business, told the FT he was going to do that using “every acronym I can throw out at you”.
Roberts was referring to the panoply of transactions that allow banks to originate debt and distribute it to investors, helping to free up cash for more lending by lowering the amount of capital the loans consume.
Among them are collateralised loan obligations, significant risk transfers and credit default swaps. They largely achieve the same objective of offloading some of the riskiest parts of a bank’s loan book to investors.
The plan hinges on the insatiable appetite of large private credit firms such as Apollo Global Management and Blackstone to hoover up loans originated by banks. HSBC’s own asset management arm will also be a key investor in the transactions as it looks to put to work a $4bn investment from the bank in its private credit funds.
“Frankly, we’re a bit behind the times,” Roberts said in an interview at HSBC’s headquarters in Canary Wharf. The bank was still building the infrastructure it needs to churn out a steady stream of transactions to supply investors, he said.
Roberts has spent the past 12 months fusing together two historically distinct businesses inside the bank. As chief executive of the new group he oversees HSBC’s payments and trade businesses, run by Manish Kohli and Vivek Ramachandran, respectively, as well as the markets division, which Patrick George heads.
Roberts is also now in charge of a diminished investment bank after Elhedery shut down the mergers and acquisitions and equity capital markets advisory businesses in the US, UK and Europe: a decision that Roberts says was necessary for the bank to focus on growing markets such as the Middle East and Asia.
As part of the merger, Roberts and his lieutenants refined how the business worked, changing how coverage teams were organised, setting return thresholds for relationship lending and starting to measure revenue on a global basis.
“I think people were amazed at how quickly we moved . . . which was not necessarily a trait that most people would associate with HSBC — quick and decisive,” he said.
Roberts said the combined business would make HSBC a formidable competitor to the likes of JPMorgan Chase, which has a $4tn balance sheet compared with HSBC’s $3.2tn, in areas such as payments and transaction banking. The aim is to become the number one corporate and institutional bank globally.
But bringing together bankers from different disciplines has historically been one of the main deterrents to merging the units.
The commercial banking business, which delivered almost $12bn in profits at the end of 2024, is known for its close ties to entrepreneurs and companies that have long-standing relationships with the bank. However, global banking and markets, with around $7bn in profits at the end of 2024, has mostly addressed the debt needs of large corporations.
“One of the challenges you have is that you have to pick one leader for two quite different disciplines,” said a former senior HSBC executive. “Walking into an entrepreneur-owned business where HSBC has had a relationship for 40 or 50 years, maybe second or third generation, takes a different type of skill than walking in and pitching for a debt capital markets deal.”
Roberts, who joined HSBC from Citigroup in 2019, said this was a misconception he was trying to get rid of.
“In the past there was a view that you couldn’t put the business together because of some sort of hugely different cultural issues,” he said. “We were all one bank. People didn’t want to do it because some of them weren’t going to fare too well when they did it,” he added.
The tie-up, a key part of Elhedery’s cost-cutting strategy and promise to deliver $1.5bn in annual cost savings to shareholders, has inevitably led to job losses — in particular for senior managers.
“[There were] a lot of double roles, a lot of duplication, a lot of inefficiencies that built up. Anytime you build two organisations . . . you just build all this excess cost, all these excess people,” said Roberts. “You’re building banks within banks, and that’s highly inefficient.”
The exact number of job cuts is difficult to gauge using HSBC’s reported figures because of the way the business segments have been carved up since the restructuring. However, the corporate and institutional bank has reduced the number of managing directors by almost a quarter, said a person familiar with the figures, and now has approximately 46,000 employees.
HSBC said it could not comment on the figures and would update the numbers at its annual results in February.
The job losses and speed with which Roberts and his team have merged the two businesses has made it difficult to win over employees, however. “We’ve never done something this big, and it was quick,” he said. “Acceptance always lags, and it’s frustrating.”
Roberts held numerous town halls last year to set out his vision for the business as employees worried about the bank losing its identity, but said he had made peace with the fact that some staff were not going to accept the reality of it.
“We’re not a big investment bank. We are a 99 per cent corporate commercial bank. None of that has changed,” he said.
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