HSBC to wind down M&A and ECM capabilities in Europe, UK & Americas, memo shows

HSBC is preparing to wind down its M&A and equity capital markets businesses in Europe, the UK and the Americas as part of a major shake-up of its investment banking operations, a memo the bank sent staff showed on Tuesday.

"...our intention is to move to a more competitive, scalable, financing-led model," Michael Roberts, CEO HSBC Bank said in the memo.

"We will retain more focused M&A and Equity Capital Markets capabilities in Asia and the Middle East, and we will look to wind-down those activities in Europe, the UK and the Americas," Roberts said in a memo sent to employees seen by Reuters.


CEO Georges Elhedery is working through a major cost-cutting exercise at Europe's largest bank that was launched shortly after starting in the role in September.

The sweeping overhaul is aimed at streamlining costs, tightening focus and improving accountability of performance, but analysts had raised questions about the scale of savings Elhedery could achieve and what parts of the business would be impacted.

The Asia-focused bank will keep is debt capital markets, leveraged acquisition finance operations globally, Roberts told staff in the memo, which acknowledged how unsettling the news would be for HSBC bankers working in those regions who advise on dealmaking and corporate equity raising firms, such as through initial public offerings.

"I've lost count of the number of times HSBC has been in and out of ECM in the UK. It never seems to succeed," Shore Capital analyst Gary Greenwood told Reuters.

"At the end of the day, these are expensive businesses to run and if you are not winning the business and generating the fees then its easy to lose money."

HSBC shares were little changed after the news, last down 0.5% at 820 pence, valuing the bank at about 147 billion pounds ($182.9 billion). ($1 = 0.8037 pounds)