There are more than a few dozen senior investment bankers heading for the door at HSBC as it restructures its global banking and markets (GBM) business. Headcount in the division has fallen to a two-year low as part of the bank’s ongoing cost-cutting exercise.
HSBC spent $200m on staff restructuring and other costs in GBM in the first half of 2016, bringing headcount in the division to its lowest point since February 2014, it said during its interim results this morning.
It doesn’t break out headcount by division, but staff numbers at its investment bank were 15,500 at the end of last year, which was a reduction of 1,000 people on 2014. Staff numbers in GBM have reduced “significantly” during the first half, largely in Asia and Europe, it said.
HSBC unveiled another restructuring programme in its investment bank in June, when it created a corporates, financials and multinationals group led by Philippe Henry. At the time, a “few dozen” senior investment bankers were made redundant as it eliminated any duplicate roles from the combination of advisory and capital financing divisions.
The first half of this year has been tough on the investment banking divisions of most investment banks. UBS said that 200 people had departed from its investment bank in the second quarter - the largest quarterly decline in at least two years - while Credit Suisse's plans to eliminate 1,800 jobs in London has so far resulted in over 1,250 people leaving this year.
HSBC is shrinking its investment bank as a result of tough market conditions and pressures to reduce its risk weighted assets. The job cuts are not related to Brexit, although the bank has said previously that 1,000 trading jobs could shift from London to Paris in the wake of a Leave vote.
While the bank didn’t reiterate any intention to move jobs out of London after Brexit, chairman Douglas Flint said in a statement that “re-positioning our European business once the future of the UK’s current ‘passporting’ arrangements for financial services is clarified” is likely to add to the bank’s current workload of regulatory changes.
Client-facing revenues in its global banking and markets division were down 8% year on year in the first half, but adjusted profit before tax fell by $1.1bn, or 21%.
Foreign exchange is still its biggest revenue driver in its trading business, with $1.49bn booked in the first half of 2016. Despite the Brexit trading volume benefit in this division, revenues were still down by 6% year on year. Rates posted a year on year increase, with revenues rising from $961m to $1.1bn or a 16.1% rise.
However, equities revenues slipped by 46% year on year – from $1.06bn to $575m.
Headcount in HSBC’s overall European operation fell by 4,480 people year on year, to 65,387. Headcount in Asia, where it employs 119,699 people, slipped by 889 over the same period.