Fear hits HSBC as teams are restructured during the appraisal process

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HSBC restructuring

Things are a bit edgy over at HSBC. First, global head of investment banking Matthew Westerman disappeared unexpectedly. Now various other senior people seem to be dropping off the org chart.

The debt capital markets team in particular seems to be undergoing alterations. Global Capital reported last week that PJ Bye, HSBC's very long serving (21 years) global head of public sector syndicate is leaving the bank. Rob Gardiner, a director on the FIG origination team is also understood to be interviewing for other positions internally.

A spokeswoman for HSBC said: "We review on an annual basis performances across Global Banking & Markets and make appropriate changes to strengthen and grow the business.”

Insiders say the uncertainty created by Westerman's departure is being compounded as the bank runs through the harsh appraisal process he implemented after arriving at the bank in 2016. Intended to differentiate more fully between high and low performers, this is the only the second year that Westerman's process is being used - despite the absence of its progenitor. The new process is said to be far more detailed and HR-intensive than the older one.

HSBC was the biggest European investment bank by revenues in the third quarter, when its fixed income and equities trading businesses outperformed all rivals compared to a year earlier.  However, HSBC's global banking revenues only 4% year-on-year in the first nine months of 2017 and declined marginally in the third quarter.

Like most banks, HSBC is seeking to cut costs whilst simultaneously investing in compliance and regulatory changes. Costs in the global banking and markets division consumed just 57.8% of revenues in the first nine months of the year, making HSBC one of the most cost-effective banks in the market. However, heavy recruitment by Westerman prior to his exit is thought to be squeezing the bank's bonus pool, with some of Westerman's big name hires likely recruited on guarantees.

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