HSBC shocks bankers with layoffs on bonus day, withholds payouts

HSBC’s cost-cutting measures reflect a broader trend in the financial sector, with other institutions like Barclays also reducing staff while managing expenses more aggressively

HSBC has carried out a series of layoffs within its investment banking division, axing several employees, including vice presidents and senior staff, on the same day they were expecting to hear about their 2024 performance bonuses. The cuts primarily affected staff in London and Hong Kong, leaving many employees stunned by the decision.

According to reports, those who were laid off received no part of their expected performance bonuses, which were generally tied to the bank's performance in the past year. Former employees expressed disbelief, noting that HSBC had previously been known for its employee-friendly culture. One former staff member commented, “It’s very unlike HSBC. The bank had a reputation for looking after its people.” HSBC has reportedly declined to comment on the issue.

Legal experts in the financial sector have pointed out that some banks provide pro-rata bonuses to laid-off employees based on the time they worked during the year. Tanvir Rahman, an attorney at law firm Filippatos, said, “A good employer will often pay the bonus pro-rata, but some don’t.” However, HSBC chose not to apply this practice.

HSBC's restructuring and cost-cutting strategy

The layoffs are part of a larger strategy spearheaded by CEO Georges Elhedery, who took over leadership in September 2024. Elhedery is leading a cost-cutting initiative aimed at saving $1.5 billion annually by the end of 2026. This restructuring includes pulling back from mergers and acquisitions (M&A) advisory and equity capital markets operations outside of Asia and the Middle East. Although HSBC considered reducing its presence in Asia, it ultimately chose to retain operations in these regions due to strong client relationships.

Investment banking has always been a smaller part of HSBC’s business, with retail and commercial banking generating the majority of its profits. The bank's restructuring also involves merging divisions, cutting senior roles, and dividing operations between “eastern” and “western” markets. Rising interest rates that once boosted profits are now fading, pushing the bank to tighten its belt.

HSBC joins sector-wide cost-cutting trend

Despite the cuts, HSBC’s bonus pool for 2024 saw a slight increase to $3.8 billion, up from $3.77 billion the previous year. CEO Georges Elhedery stands to earn up to $19.2 million in 2025, contingent on a 50% increase in HSBC’s share price.

HSBC’s cost-cutting measures reflect a broader trend in the financial sector, with other institutions like Barclays also reducing staff while managing expenses more aggressively. While these changes may help the bank address financial pressures, the long-term impact on employee morale and the company’s market position remains to be seen. For now, it is clear that HSBC is focused on profitability, even if it means sacrificing some of its traditional employee benefits.