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HSBC to shut UK investment banking arm as part of major global restructuring

2025-10-02 10:41:14 By

HSBC is preparing to scale back sections of its investment banking operations across the UK, Europe and North America as part of a comprehensive global restructuring strategy under new CEO Georges Elhedery.

This development follows the bank's announcement last year of plans to achieve $3bn (£2.4bn) in cost savings and restructure into four new divisions, divided between East and West, as reported by City AM.

"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," an HSBC spokesperson informed City AM.

The company aims to transition to a "Our intention is to move to a more competitive, scalable, financing-led model," according to a memo sent to staff and seen by Reuters.

In the internal communication, management acknowledged that the changes would be disruptive for those involved in dealmaking and corporate capital raising in the affected regions.

"As part of our ongoing efforts to simplify HSBC and increase leadership in our areas of strength, we are finalising a review of our Investment Banking business," the spokesperson further added.

The news has led to a 0.7 per cent drop in HSBC’s share price. Elhedery’s streamlining plan for HSBC has already resulted in numerous senior bankers being laid off, with predictions that over 40 per cent of HSBC’s top 175 managers will be let go.

HSBC has witnessed a series of departures from its senior executive team, including Annabel Spring, the head of global private banking and wealth; Celine Herweijer, the group sustainability officer; Stephen Moss, the Middle East chief; and European leaders Colin Bell and Nuno Matos. The bank's new CEO, Elhedery, who took over from Noel Quinn four months ago, has swiftly initiated significant changes at the banking behemoth with an aim to curb expenses and streamline operations.

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HMRC sees UK firms overpaying billions in corporation tax as complex system hits businesses

UK businesses overpaid a staggering £14.2bn in corporation tax last year, a report by a prominent accountancy firm has revealed, highlighting the ongoing challenges posed by the nation's intricate financial system. Chancellor Rachel Reeves has assured entrepreneurs and investors of her support for British business, despite economic pressures from President Trump's tariffs and tax increases announced at the Autumn Budget, as reported by City AM. However, a complex tax regime is causing deep-seated issues, with many firms overpaying HMRC, as per findings by UHY Hacker Young. The accountancy firm's research, derived from a Freedom of Information request, indicates that UK companies overcompensated the government by £14.2bn in corporation tax in the year ending April, affecting approximately 400,000 businesses. The study notes that the overpayment for the fiscal year 2024 to 2025 was 21 per cent higher than the previous tax year. Corporation tax, which deducts a portion from company profits, operates on a tiered system, with the principal rate set at 25 per cent for businesses earning profits above £250,000. UHY Hacker Young's accountants argue that HMRC's approach often results in firms paying excessive corporation tax due to potential penalties if profits fall short of projections. This situation can lead to "significant cash flow problems," the researchers warn, as it falls upon companies to reclaim any overpaid funds. "Overpaying corporation tax is a double hit for struggling businesses," remarked Brian Carey, a partner at UHY Hacker Young. "Not only do they suffer from lower-than-expected profits, but they also see vital cash locked up with HMRC." This statement comes on the heels of a separate report by Thomson Reuters which highlighted that businesses now contribute to over a quarter of all UK tax receipts. The surge in corporation tax receipts has been a significant factor, with the government now collecting over £200bn through this tax. Concurrently, concerns are being raised about HMRC potentially underestimating the extent of tax evasion.

Nikhil Rathi secures another five-year term as FCA chief amidst UK regulatory overhaul

Nikhil Rathi has been reappointed as the chief executive of the Financial Conduct Authority (FCA) for a further five years, tasked with the government's new mandate to cut back on unnecessary and repetitive regulation, as confirmed by the Chancellor. Rathi, who previously served as a Treasury official and the CEO of the London Stock Exchange, will continue his leadership at the FCA, the UK's principal financial regulator, as reported by City AM. Should he complete this term, Rathi's tenure at the helm of the FCA will reach a full decade. The Chancellor has chosen to maintain stability in the role, highlighting that Rathi's contributions have been "crucial" to the government's ambitious regulatory reform efforts aimed at streamlining the UK's regulatory framework to eliminate perceived impediments to economic expansion. On Christmas Eve, Rachel Reeves and Keir Starmer issued a directive to the heads of the UK's ten leading regulatory bodies, urging them to "tear down the regulatory barriers" they believe are constraining economic progress. This initiative to orientate the UK's regulatory bodies towards promoting growth has led to the departure or removal of several regulatory leaders, including those at the Competition and Markets Authority and the Solicitors Regulation Authority. The campaign has also triggered a significant reshuffle within the financial regulatory landscape, exemplified last month by the merger of the Payments Systems Regulator with the FCA, which aims to minimise redundant regulatory obstacles for businesses. Rathi will oversee the seamless integration of the merger. Upon hearing of his reappointment, he commented: "I am honoured to be reappointed by the Chancellor. The FCA does vital work to enable a fair and thriving financial services sector for the good of consumers and the economy." In the previous month, both the FCA and the Bank of England's Prudential Regulation Authority abandoned their initiatives to regulate firms' diversity, equity and inclusion (DEI) performance. Reflecting on these actions and other measures to reduce regulatory burden, Rathi stated: "I am proud of the reforms we have delivered to support growth, bolster operational effectiveness, set higher standards and to keep our markets clean and open." Reeves expressed her approval, saying: "Nikhil Rathi has been crucial in this government's efforts to reform regulation so it supports growth and boosts investment – I am delighted he will be continuing his leadership of the FCA."

Banks face turmoil as HSBC and Barclays shares plummet amid escalating global trade war

The 'Big Five' banks on the FTSE 100 were engulfed in losses on Wednesday as tensions escalated in the global trade war. China retaliated by hiking its tariff on US goods to 84 per cent, a response to President Donald Trump's 50 per cent levy that came into effect today, pushing China's total import tax to a staggering 104 per cent, as reported by City AM. HSBC shares took a hit of over four per cent due to Beijing's countermove. Barclays and Standard Chartered also felt the heat, with their shares dipping nearly five per cent. Stocks had already been under pressure in early trading as Trump showed no intention of retreating from his tariff strategy. Domestically-focused lenders Lloyds and Natwest saw their shares fall nearly three and four per cent respectively. Russ Mould, investment director at AJ Bell, commented: "Yesterday's fragile recovery in stocks has been shattered by renewed selling as reciprocal tariffs on what the Trump administration regards as the 'worst offenders' comes into effect." "Investors had initially taken some positives from a willingness in the White House to negotiate with Japan and Israel but an escalation with China triggered another sell-off on financial markets." Bloomberg calculations on Tuesday revealed that more than $700bn (£546bn) of global bank stocks' market value has evaporated since Trump's 'Liberation Day.' HSBC, with its Asia-centric operations driving losses, has alone seen almost $30bn (£23bn) wiped off its value. Britain's prime lending institutions are scheduled to unveil their half-year financial reports towards the end of July, a period that may bring unwelcome news to investors as they absorb the repercussions. Shore Capital's equity analyst Gary Greenwood commented on the anticipated content of the reports, indicating they are expected to mirror "volatility in capital markets". He elaborated: "IPO's that were going to happen, impact in market related activity, impact in wealth management areas – that's where you'll feel it first." Greenwood also predicted lenders' future guidance would likely suffer due to tariffs. He explained further, saying: "On an accounting basis, banks might start to add a bit to their provisions." "More uncertainty could make them more cautious about lending and risk appetite could change to not push as hard in terms of growth." Such developments pose additional challenges for Chancellor Rachel Reeves, who has been actively advocating for banking leaders to help bolster growth within the UK.

AJ Bell's trading update reveals boom in new customers and assets

AJ Bell has reported a significant growth with assets under administration soaring to £89.5bn by the end of 2024, an indication of the investment platform's appealing eight per cent customer increase over the year. The trading platform enjoyed a 17 per cent surge in assets throughout the previous year, with a three per cent rise in the final quarter, according to its latest trading update, as reported by City AM. The customer base has nearly reached 561,000, largely owing to its direct-to-consumer platform, which saw a four per cent uptick in users during the year's last quarter. The rate at which advised customers expanded was more modest, experiencing a two per cent growth within the same period, bringing the total to 174,000. "During the quarter we continued to see the benefits of our dual-channel model and the high-quality propositions that we offer to both the advised and D2C market segments," commented AJ Bell's chief Michael Summersgill. The investment firm witnessed robust net inflows across both its platform and investments operations during the final quarter, achieving £1.4bn and £400m respectively. Particularly notable was the direct-to-consumer sector, which secured net inflows of £1.1bn, marking a hefty 57 per cent jump from the equivalent quarter in 2023. "Ahead of the October Budget, speculation around the tax treatment of pensions caused a short-term behavioural change among retail investors, which normalised quickly once the content of the Budget became known," Summersgill added. The company's chief executive stated: "The strong start to the year positions us well as we approach the busy tax year end period. We remain focused on the significant long-term growth opportunity that exists in the platform market. Our dual-channel approach and continued investments into our propositions and brand mean we are well-placed to continue our strong growth." AJ Bell recently received an upgrade from Shore Capital, moving from a Hold to a Buy rating, based on the weakness in its share price and the long-term need for people to save for retirement.

Jobs saved as Horizon Works Marketing assets acquired

Jobs have been saved at an established North East marketing agency following its administration. Horizon Works Marketing, which had operated from a base in Cramlington, called in administrators following challenges stemming from the Covid pandemic. The firm's founder says it is now looking positively to 2025 after a new company has been established to continue trading under the Horizon Works name, with 10 jobs secured in the process. Insolvency experts at KBL Advisory were appointed to Horizon Works late last year. Founder and managing director Samantha Vassallo acquired the assets of Horizonworks Marketing Limited and has established Horizon Works Limited. The business, which is now based out of the Blyth Workspace building at the Port of Blyth, was originally set up in 2010 and has established a specialism in business to business marketing services for innovation and technology-led manufacturing and engineering businesses. Its team of marketers, writers, designers, digital experts and PR and communications specialists provide a range of services including strategy creation, marketing campaigns, SEO, brand development, media relations and digital development. In the 15 years since its inception, Horizon Works has carried out work for a variety of clients across the automotive, process, engineering, energy and technology sectors - many of them North East-based and others further afield. It is also an affiliate partner of several sector-based groups such as the Engineering and Manufacturing Network, a Fit for Defence partner of Make UK Defence, and is a member of the North East Automotive Alliance (NEAA), NOF and the Entrepreneurs’ Forum. Samantha Vassallo, managing director of Horizon Works, said: "The restructure was necessary due to legacy financial pressure resulting from the Covid-19 pandemic. All jobs have been safeguarded and the specialist team that Horizon Works has built up over 15 years remains in place.

UK dividends dip as mining sector cuts payouts, despite overall growth in 2024

In 2024, UK dividends experienced a 0.4 per cent decrease on an underlying basis after mining companies cut payouts by 40 per cent compared to the previous year. Despite headline dividends in 2024 increasing by 2.3 per cent to £92.1bn, this was largely due to a surge in one-off payments amounting to £5.6bn. Underlying or regular dividends dropped to £86.5bn, primarily due to a £4.5bn reduction in payouts by mining stocks, which had been the largest paying sector over the preceding three years, as reported by City AM. Excluding miners, underlying growth in UK dividends for 2024 stood at four per cent, while headline growth was 8.4 per cent, as per data from Computershare’s Dividend Monitor report. Housebuilders also contributed to the decline in the total dividend, with FTSE 100 giant Persimmon and FTSE 250 member Bellway both reducing payouts throughout the year. Overall, 17 out of 21 sectors saw increased or maintained payouts in 2024, with banks, insurers and food retailers being the strongest contributors to growth. Conversely, the final quarter of 2024 witnessed a 0.1 per cent rise in underlying dividends while headline figures fell by 0.5 per cent. Looking ahead to 2025, Computershare estimated that median dividend growth should continue at a rate of between four to 4.5 per cent. However, it highlighted that significant cuts have already been announced by several major firms, such as the soon-to-be-merged Vodafone/Three, which are likely to bring down the headline figures. As a result, it is predicted that underlying dividend rates will see a modest increase of just one per cent to £88.2bn, while headline rates are anticipated to rise by a mere 0.7 per cent to £92.7bn. David Smith, portfolio manager at Henderson High Income Trust, commented on the potential impact of the UK Budget: "The impact of the UK Budget is likely to curtail dividend growth for some domestic businesses given corporate margins are coming under pressure from the increase in National Insurance and minimum wage." He also pointed out the international aspect of the UK market, stating, "However, one must remember that 75 per cent of the UK market’s revenues are derived overseas where the global economy is improving."

Lloyds Banking Group to transform head office with £200m investment

Lloyds Banking Group is set to pour £200m into the revamp of the Scottish Widows headquarters, making it the financial giant's primary hub in Scotland. The renovation of the Port Hamilton building on Morrison Street, Edinburgh, executed in collaboration with Drum Property Group, pledges to bolster Lloyds' presence in the Scottish capital where approximately 10,000 staff are based, as reported by City AM. For nearly three decades, the building has served as the core office of Scottish Widows and is expected to retain its role post-upgrade in 2027, continuing to oversee pensions and investments. This eight-storey property, spanning 325,000 sq ft and known for its distinctive curved roof, stands out as an iconic edifice in Edinburgh’s financial district. According to Lloyds, this initiative is part of a broader commitment to cultivate a more sustainable and environmentally friendly office network across the UK, advancing towards their net zero ambitions. This endeavour aligns with the group's previous movements, including last year's full refurbishment of the Bristol office and relocation to Leeds’ most eco-efficient office space. However, earlier this month, City AM detailed Lloyds’ plans to shutter its Liverpool facility later this year, a decision affecting around 500 employees. This closure is seen as part of a wider strategy to maintain "fewer, better-equipped" offices and streamline operational costs. In a statement, Lloyds confirmed that no jobs have been cut as part of the closure plans. Instead, employees at the office will be asked to relocate to its Cawley House office in Chester. The bank added that 80 per cent of employees based in Speke are currently working remotely or will be doing so when the building closes. This news follows reports that senior staff at Lloyds Bank may face bonus cuts if they do not attend the office at least twice a week. Chira Barua, CEO of Scottish Widows, commented: "There’s a real buzz in the fintech scene in Scotland and we’re committed to staying right in the centre of it." He further stated: "We’ve made huge progress in connecting customers with their financial futures and we’re starting to see how powerful digital engagement and gamification will be in the future." He also noted the potential to make a significant difference for customers, saying: "There’s huge potential to help make a real difference for our customers’ lives and we’re right out in front building all the parts we need to innovate in a massive way." Sharon Doherty, chief people and places officer at Lloyds Banking Group, added: "We’re creating modern, inclusive, sustainable and fun workplaces where our people love to work." She also mentioned the improvements made to their offices across the UK, stating: "We’ve already made significant improvements to our offices across the UK, with more to come." "And our redesigned home in the centre of Edinburgh will help us connect, collaborate and spark the creativity to deliver great outcomes for our customers." Graeme Bone, group managing director at Drum Property Group, commented on the £200m redevelopment of Port Hamilton as "The £200m redevelopment of Port Hamilton presents an exceptional opportunity for Lloyds Banking Group to upgrade and enhance one of Edinburgh’s landmark buildings and deliver an exceptional working environment for Lloyds colleagues in an unrivalled location."

Investors pile into gold as Trump's tariff turmoil continues

The price of gold has soared to another record peak, fuelled by concern over President Donald Trump's tariff strategy and a weakening dollar, leading investors towards the traditional sanctuary of precious metals. Gold's value ascended 1.5% to surpass $3,200 (£2,451) per troy ounce on Friday – an unprecedented level – as Asian markets stumbled due to the ongoing repercussions of President Trump's deferred tariff measures, as reported by City AM. Despite its status as a refuge for capital during turbulent times, the precious metal had initially been swept up in a severe sell-off amid tariff-driven market chaos. Gold spot prices experienced a remarkable increase of over 30% since the beginning of 2024 but witnessed a downturn from $3,166/oz to $2,973/oz from April 2 to April 6. Market experts believe that investors were compelled to sell their gold assets to cover margin calls from creditors. Pepperstone analyst Michael Brown pointed to the removal of the "risk premium" associated with gold after its exclusion from the postponed tariffs Trump labeled ‘Liberation Day’ as the cause of the brief dip. Nevertheless, from April 6 onward, gold has bounced back robustly, registering its most significant bi-day surge since 2020 and reaching a new all-time high. Market strategists have attributed this latest rally to the faltering US dollar – which renders the metal more accessible to buyers using other currencies – and predictions that central banks might accelerate interest rate cuts more than previously presumed to prevent an economic deceleration. This week has seen the dollar descend to its lowest level against major global currencies in a decade. Dominic Schinder of UBS Global Wealth informed Bloomberg TV that further rate cuts from the Federal Reserve would provide another "leg up" for gold, as the yield on holding cash – a common refuge amid prevalent bearish sentiment – is lower. This rally boosted London-listed gold miners, leading the FTSE 100 higher on Friday morning. Fresnillo saw an increase of approximately 5.9 per cent, while Endeavour experienced a surge of over 4.5 per cent in early trades. Brokers at Peel Hunt upgraded precious-metal-miner Fresnillo from 'hold' to 'add' in a note, suggesting that sustained high gold and silver prices would generate more cash flow at the commodities giant. "[The first quarter] saw gold and silver prices well ahead of expectations on rising market uncertainty," they noted. "The extreme US tariff announcements simply added to this uncertainty.

ECB and Fed rate decisions to underscore economic divergence between Europe and the US

Markets are gearing up for a busy week as they anticipate central bank announcements, with interest rate decisions due from both the US Federal Reserve and the European Central Bank (ECB). The upcoming decisions are set to underscore the divergent economic perspectives between the two regions, with the ECB likely to slash borrowing costs for the fifth consecutive time, while the Fed is expected to maintain rates, as reported by City AM. In December, the Federal Open Market Committee (FOMC) trimmed rates by 25 basis points and indicated that only two rate cuts would occur in 2025. However, investor expectations for further rate reductions in the US have moderated in recent weeks, despite ongoing progress on inflation. This shift in sentiment is attributed to concerns about the inflationary effects of Donald Trump's economic policies and the persistent robustness of the US economy. "We expect the strength of the economy and uncertainty over immigration and trade policy to prompt the Fed to pause its easing cycle," commented Bradley Saunders, North America economist at Capital Economics. Data released the day after the Fed's meeting is projected to reveal that the US economy expanded at an annualised rate of 2.7 percent in the fourth quarter. Considering these factors, most traders are now predicting just one rate cut, with some even speculating that the Fed might increase rates again in the near future. Chair Jerome Powell is expected to face numerous questions about the outlook for rates in his upcoming press conference, especially considering President Trump's insistence on lower interest rates. BNP Paribas analysts predict that Powell will also be questioned about the "tail risk of rate hikes." They anticipate a cautious response from him, suggesting rate hikes are less likely but could be considered if necessary to ensure a soft landing for inflation and growth. This contrasts sharply with the economic outlook for the ECB. ING's global head of macro, Carsten Brzeski, believes a rate cut is a "no-brainer" given the weak growth outlook. Despite the ECB cutting rates four times in 2024, bringing the benchmark interest rate down to three per cent, Brzeski argues this is still too high. He stated: "The deposit interest rate is still restrictive and too restrictive for the eurozone economy’s current weak state," Economic growth figures due on Thursday are predicted to show a mere 0.1 per cent increase in the fourth quarter, significantly weaker than the US. The IMF's latest forecasts suggest that the US will grow by 1.9 per cent next year, while the euro area will only grow by 1.0 per cent. Given such a weak growth outlook, traders are anticipating four or five rate cuts from the ECB this year, despite some signs of building inflationary pressures.

Mastercard class action funder to sue Merricks after £10bn case settled for £200m

The litigation financier in the colossal class action lawsuit against Mastercard is preparing to take legal action against its own class representative after he settled a £10bn case for a mere £200m. The case, which centred around alleged overcharging of interchange fees on Mastercard debit and credit cards, concluded last month following a nine-year legal battle that reached the Supreme Court, as reported by City AM. This was the first case under the UK’s 2015 Consumer Rights Act, which permits collective proceedings in competition matters. It also followed the European Commission ruling that found Mastercard's interchange fees violated EU laws. Lawyer Walter Merricks led this class action, with Innsworth Capital providing funding up to £60.1m, plus an additional £15m to cover defendant costs if unsuccessful. The claim sought compensation of approximately £10bn, but it was disclosed in December that it settled for £200m. Documents unveiled on Thursday showed that half of the settlement sum, £100m, would be equally distributed to all who submitted a claim, estimated to be around 44 million people, equating to £2.27 each. The remaining £100m "will be used to pay the litigation funder." The funder indicated they would contest the settlement and claimed that Merricks would be violating his obligations under the litigation funding agreements. In his witness statement, Merricks expressed that "despite this stance taken by Innsworth, I remained of the view that the interests of the class were best served by agreeing the £200m settlement, so I indicated to Mastercard that I was minded to accept the offer." He also noted in his statement that due to this decision, Innsworth Capital is intending to initiate arbitration proceedings against him, which includes a claim for damages. He detailed how, upon informing Mastercard of the impending claim by Innsworth, Mastercard decided to make £10m available "in order to deal with the threatened arbitration against me." Seema Kennedy, executive director at Fair Civil Justice, remarked on the advancements: "this claim shows why reform is so badly needed, and we will continue to call on the Government to introduce measures to improve transparency and accountability of the funding sector."