HSBC Holdings Plc is winding down its mergers and acquisitions (M&A) and equity capital markets (ECM) operations in the United Kingdom, Europe, and the United States as part of a comprehensive restructuring of its investment banking arm. The decision comes as the bank prioritizes its strengths in Asia and the Middle East, regions where growth opportunities are more prominent.

In a statement on Tuesday, an HSBC spokesperson noted, “To streamline our operations and enhance leadership in our key markets, we are finalizing a review of our Investment Banking business. This includes retaining focused M&A and ECM capabilities in Asia and the Middle East, while phasing out these activities in the UK, Europe, and the US, in compliance with local legal requirements.”

HSBC’s Interim Report

According to HSBC’s interim report, global investment banking accounted for $544 million in revenue during the first half of 2024, representing just 6.2% of the bank’s total income for the period. Shares in HSBC, listed in London, dropped by 0.16% following the announcement.

This development aligns with CEO Georges Elhedery’s broader cost-cutting initiatives. Since assuming leadership in late 2023, Elhedery has introduced a revamped geographic structure, consolidating operations into four divisions. The bank’s “Eastern markets” branch merges its Asia-Pacific and Middle Eastern operations, while the “Western markets” division oversees the UK, Europe, and the Americas.

High-Interest-Rate Environments

Despite benefiting from recent high-interest-rate environments, HSBC faces challenges as monetary policies in Europe begin to relax. In Q3 2024, the bank reported pre-tax profits of $8.5 billion, surpassing market expectations of $8 billion, and announced a $3 billion share buyback.

Adding to the transition, HSBC welcomed its first female Chief Finance Officer, Pam Kaur, earlier this month. Meanwhile, long-serving chair Mark Tucker is expected to step down by 2026.