Big exit at HSBC prompts fears of more departures to come
Why is Hossein Zaimi leaving HSBC? News of the former global equities chief's departure was reported last Friday. Zaimi himself isn't commenting on his exit and HSBC isn't saying anything about his disappearance. It's understood that Zaimi left voluntarily (Financial News says HSBC is already looking for a replacement). However, headhunters suggested that his exit came as a surprise: Zaimi had been with HSBC in Hong Kong for over sixteen years and was global head of equities at the bank since 2017.
Irrespective of the machinations that led to Zaimi's departure, his absence from HSBC is stoking fears that additional equities exits could be coming. HSBC announced plans for 35,000 job cuts in February 2020, before the pandemic began in earnest. At the time, it said it would reduce sales and research coverage in European cash equities. Most of those cuts are understood to have happened already, but with CEO Noel Quinn now suggesting that February's cuts may be inadequate in the face of the pandemic, there is the possibility of a revised plan and further equities cuts later in 2020 and into 2021.
HSBC is due to report its results for the second quarter of 2020 on August 3. Last week, every large U.S. bank reported double digit percentage increases in equities sales and trading revenues in the first half of 2020 vs. the first half of 2019, but HSBC has a steep hill to climb. - In the first quarter, its equities trading revenues fell 23%, from $377m in Q1 2019, to $289m in Q1202. With profits concurrently falling 35% across HSBC's global banking and markets unit in the quarter, equities sales and trading may yet prove an appealing place to cut more costs.
Zaimi will no longer be present to protect the business and HSBC's global markets divison is run by Georges Elhedery, a former rates trader. Alongside Elhedery and Quinn, the person likely to have a say in any future cost cuts is Chira Barua, the former banking analyst and McKinsey Consultant who joined HSBC as group head of strategy in May 2020. Barua previously covered HSBC in his days as an equity analyst at Sanford Bernstein. In 2017 he noted that almost all of HSBC's equities trading business was based in Asia, whilst also pointing out that the bank's credit business was tiny and that the volatility associated with its credit revenues seemed considerable.
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