Following last year’s surprise East-West division, HSBC now plans to shutter its M&A and equity capital markets activities outside Asia.
The debt capital markets and equities trading businesses in the region will not be impacted, sources familiar with the issue confirmed.
A spokesperson said: “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. We will retain more focused M&A and equity capital markets capabilities in Asia and the Middle East and will begin to wind-down our M&A and equity capital markets activities in the UK, Europe, and the US, subject to local legal requirements.”
The news contrasts comments made in the H1 2024 analysts call, where former CEO Noel Quinn stressed the firm’s global nature: “Fundamentally, at the core, we’re an international bank […] we’re essentially about helping businesses and individuals trade internationally, invest internationally.”
Investment banking revenues have been steadily rising at HSBC over recent years, with a drastic jump from US$622 million in the first nine months of 2022 to US$812 million a year later. In 2024, revenues were reported at US$819 million.
HSBC’s focus on the Asian market follows strong IPO issuance in local markets. In 2024, the Indian National Stock Exchange and the Hong Kong Exchange made it into the top five issuance venues – balanced out by a decline in European performance. Chinese offerings were also subdued.
READ MORE: India, Middle East are new IPO hotspots as Europe and China flag
In the Q3 2024 analyst call, CEO Georges Elhedery noted the increase in trade between the Middle East and Asia and stated that it was a driving force for the bank’s simplification strategy. “It is meant to help us speed up the build-out of a very promising corridor between the Middle East and Asia. We’re seeing material growth in this corridor over the last few years. Our customers across both the Middle East and Asia are looking for opportunities of trade and investments between them.”
In recent years, HSBC has invested heavily in its Asian businesses – perhaps a sign that this western exit is less sudden than it seems. Bolt-on M&A projects over the last four years include L&T Investment Management in India, Citi’s China business and the complete repurchase of its own Chinese asset management business.
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