HSBC Restructures Trading Operations to Strengthen Debt Financing Push

HSBC Holdings plc HSBC is undertaking a sweeping reorganization of its trading business as Chief Executive Officer, Georges Elhedery, intensifies efforts to position the bank as a global leader in debt financing, per a Bloomberg report. As part of the restructuring, the lender is unifying several major trading desks, including Group-of-10 rates, foreign exchange, emerging-markets rates and commodities, into a single global macro division, according to a memo seen by Bloomberg.

The newly formed unit will be led by Volkan Benihasim and is intended to streamline decision-making and better align trading capabilities with client needs.

In a parallel move, HSBC is folding its derivatives clearing services into the global equities business. The bank is also consolidating a wide range of debt-related activities — spanning high-yield, investment-grade and emerging-market credit trading — under a new global credit and financing umbrella.

This newly structured team will work in close coordination with HSBC’s investment bankers and underwriters to strengthen its end-to-end financing offering.

Leadership for this division will be finalized after a brief internal selection process. Until a permanent head is appointed, the unit will be jointly overseen by regional leaders Antoine Maurel and Monish Tahilramani.

HSBC’s Strategic Shift Toward Financing Scale

Elhedery has been driving an aggressive transformation of the bank’s global footprint, with a clear emphasis on enhancing profitability in areas where HSBC benefits from scale and balance-sheet strength.

As part of that strategy, the bank has pared back most of its advisory and equity-underwriting operations across the US, UK and continental Europe. The renewed focus now centers on debt markets, where HSBC believes it can more effectively challenge top-tier Wall Street firms.

The restructuring underscores HSBC’s intention to deploy its substantial balance sheet more strategically to win business in trading and markets.

As the reorganization unfolds, Mehmet Mazi — the long-time head of global debt markets who has led the business since 2020 — will be exploring other opportunities. His departure marks a significant leadership change within the division he has guided for decades.

HSBC’s Price Performance & Zacks Rank

Shares of HSBC have rallied 47.1% in the past year, outperforming the industry’s growth of 40.6%.

Currently, HSBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Restructuring Efforts by Other Banks

Bank of Montreal BMO has initiated a process to sell some of its U.S. branches, which hold approximately $6 billion in deposits, per the Wall Street Journal, as cited by Reuters. The move highlights BMO’s efforts to exit select geographies and streamline its U.S. retail footprint, following its largest acquisition in 2023.

According to the report, Bank of Montreal is weighing the divestiture of branches in states such as Wyoming and the Dakotas. The branches may be sold either individually or in clusters and could include associated loans. However, the plans are still preliminary and may not ultimately result in a transaction.

Similarly, Deutsche Bank AG’s DB asset management arm, DWS, is preparing to sell its majority-owned data center platform, NorthC, for a potential valuation of more than €2 billion. This was first reported by The Financial Times, citing people familiar with the matter.

By initiating the sale of NorthC, DB’s arm, DWS is aiming to monetize a fast-growing digital infrastructure business at a time when valuations are attractive. The European data center market is booming, fueled by surging demand from Artificial Intelligence and cloud adoption.

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This article originally published on Zacks Investment Research (zacks.com).

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