HSBC’s longshot dream of rivaling Wall Street comes to an end

For years HSBC Holdings Plc harboured dreams of becoming a major player on Wall Street and in the City of London. This week, it finally called time on those ambitions.

The London-based lender began informing select managers in its corporate advisory and equity underwriting teams in New York, London and continental Europe that it was shuttering their businesses last Friday. However, for most staffers the announcement on Tuesday came as a complete shock, according to people familiar with the matter who asked not to be named discussing internal information.

As bankers made their way into HSBC’s offices, they were only aware that they had to dial in to an important call. As that call got underway — led by Chief Executive Officer Georges Elhedery and Michael Roberts, the bank’s new head of corporate and institutional banking — it became clear that once their current deal pipeline was exhausted, their jobs would be gone.

The number of staff affected will be in the low hundreds, two of the people familiar with the matter said. In lieu of losing their jobs, some bankers will be given the option to move to Hong Kong or Dubai, where HSBC will maintain its full investment banking presence, they said.

A spokesperson for HSBC declined to comment.

On the call, Elhedery made the initial announcement before Roberts emphasized the point: HSBC would no longer tolerate the cost and expense of running sub-scale operations that stood no chance of competing with the likes of JPMorgan Chase & Co or Goldman Sachs Group Inc.

HSBC is Europe’s largest bank, and one of the world’s biggest distributors of debt securities — but when it comes to the M&A and equity underwriting, the firm is a minor player. In the US, the bank ranked 15th last year for equity and equity-linked deals, a marginal improvement on its placing the year before, but well behind smaller rivals such as Jefferies Financial Group Inc. and Mizuho Financal Group Inc.

It’s a similar picture in the UK and Europe, according to data compiled by Bloomberg.

In M&A, the bank was not ranked among the top 20 players in the US last year and was 15th in the UK, up from 26th the year before. In a memo to staff, the bank said its aim was being number one in a market and to focus on its core businesses in Asia and the Middle East, where it offers more of a challenge to Wall Street.

“HSBC has struggled to gain critical mass in US and European equities as well as M&A over the years,” said Joseph Dickerson, a banks analyst at Jefferies.

In European debt issuance, which is unaffected by the changes, HSBC is solid top 10 bank and often inside the top five in the region, according to data compiled by Bloomberg. In Asia, HSBC is frequently the bank to beat.

“Our regional structure is designed to make it easier to connect our clients with investment and financing opportunities around the world, using our unparalleled network,” Roberts said in an emailed statement. “We are a global bank that provides our clients with a range of leading banking products and services which other banks find hard to match, spanning from transactional banking to capital markets.”

Extra bonuses

For staff in the middle of deals, there will be special bonuses to keep them incentivized until their work is done. The bank acknowledged that the news about the units closing would be “unsettling.”

HSBC is advising on live transactions including Fortress’s £350 million ($435 million) bid for UK-listed restaurant group Loungers Plc.

Getting out of M&A and equity capital markets is a rare move for a corporate bank. Advisory businesses don’t require much capital while generating fee income that helps them offset the blow from interest rates falling. HSBC’s departure also comes as dealmaking activity is rebounding in Europe and across the globe.

It’s the latest move in Elhedery’s plan to cut about $3 billion from HSBC’s overall cost base, which has already seen the company’s management board cut by about a third and operations rejigged into four new divisions.

For HSBC’s Middle East business, which has been put under the umbrella of Asia as part of the bank’s revamp, there is a sense of relief that it has avoided some of the cuts now hitting Europe, according to people familiar with the situation.

“This feels like quite a small step in the context of the wider group, but they have struggled for a while in these areas,” said Edward Firth, a banks analyst at Keefe, Bruyette & Woods in London.

© 2025 Bloomberg

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