HSBC has announced plans to scale back its investment banking operations in the EU and the U.S. in favor of focusing on its Asian markets, where it generates the most revenue.
The news comes amid a growing panic among investors that Asia’s capabilities in finance and tech are growing, fuelled by this week’s disruptive release of DeepSeek.
In a memo on Tuesday, HSBC, which ranked 14th globally in investment banking fees in 2024, told staff it was moving to a “more competitive, scalable, financing-led model.”
The memo from CEO Michael Roberts, seen and reported by Reuters , said the bank would remain increasingly focused on the equity capital markets capabilities in Asia and the Middle East.
It is unclear how many roles will be cut as part of the company’s new strategy.
The U.K.-based bank has been targeting growth in Asia since 2021, following a significant drop in profits following the Covid-19 pandemic.
HSBC’s restructuring plans involved cutting its workforce by around 35,000 and investing up to $6 billion in Asia.
In 2024, HSBC announced it was separating its operations into Eastern and Western markets, leading to government concerns that the bank was moving away from the U.K.
The recent decision to exit key segments of its investment banking business in the U.K., Europe, and the Americas will likely have intensified these concerns.
HSBC’s further pivot to Asia could be perceived as an additional indication that the bank was moving away from the U.K., potentially leading to job losses and reduced financial activity.
“As part of our ongoing efforts to simplify HSBC and increase leadership in our areas of strength, we are finalizing a review of our Investment Banking business,” an HSBC spokesperson said.
“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,” it added.
In recent years, Asia has made significant advancements in technology and finance, positioning the region as formidable competition to U.S. and European-based companies.
While the U.S. has historically dominated global market share in these sectors, the meteoric rise of companies like Huawei, Tencent, and the newly disruptive DeepSeek has threatened new challenges to America.
Since its explosive release on Monday, Jan. 20, Chinese AI model DeepSeek R1 has raised significant doubts about the U.S.’s AI leadership.
DeepSeek R1’s performance currently competes with the best U.S. exports, such as OpenAI’s GPT, and has done so at a much smaller development cost.
U.S. President Donald Trump called DeepSeek “a wake-up call” for America’s tech industry, claiming it could be “a positive” for the country.
“If you could do it cheaper, if you could do it [for] less [and] get to the same end result. I think that’s a good thing for us,” Trump said.