(Bloomberg) — HSBC Holdings Plc expects $1.8 billion in costs over the next two years as it embarks on a global restructuring program that has seen the lender shutter some of its businesses and slash management ranks.
Reporting fourth-quarter pretax profit of $2.3 billion that beat estimates, Europe’s largest bank also said it expected to cut expenses by $1.5 billion a year. It also announced a $2 billion share buyback.
“Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy,” Chief Executive Officer Georges Elhedery said in a statement on Wednesday. “We are creating a simple, more agile, focused bank built on our core strengths.”
With Elhedery at the helm for roughly six months, HSBC has witnessed one of the biggest upheavals in more than a decade. He wound down some of the lender’s investment banking operations in Europe, the UK and Americas in a bid to focus on areas where it could “best serve” its corporate and institutional clients. The broad moves have also seen a slew of top executives heading for the exit.
Bloomberg News reported in December that HSBC was examining plans to cut costs by at least $3 billion, equivalent to reducing its annual expense bill by about 10%. Discussions over the scale of the cuts have been going on for months at the top level.
Days after taking over from Noel Quinn as CEO, Elhedery told a townhall meeting in Hong Kong that he would be focused on keeping a lid on costs. Six weeks later, he unveiled the revamp that also involved creating a new global commercial and institutional banking unit through the combination of two of the lender’s largest divisions, while splitting Hong Kong and the UK as standalone businesses.
Further management changes have followed, including the December announcement of the departure of Annabel Spring, global head of private banking. Other senior managers have been forced to reapply for their jobs. “The process has been measured, thoughtful and fair,” Elhedery said at the time.
The CEO has also set in motion plans for further asset sales and business closures, including a strategic review of the bank’s Maltese operations, sale of its South Africa corporate banking unit, as well as the closing of HSBC’s Zing payments app. Last month, the bank said it would stop providing M&A and equity underwriting services in New York, London, and continental Europe.
More stories like this are available on bloomberg.com