HSBC cut some bankers and its ex-trader CEO is pitching some deals

It's not unusual for the CEOs of investment banks to personally pitch deals in an effort to make clients feel special. At Goldman Sachs, CEO David Solomon, for example, reportedly helped Kim Posnett et al to win Goldman's lead role on the SpaceX IPO by sending some DMs to Elon Musk. With this possibly in mind, Bloomberg reports that HSBC has deployed CEO Georges Elhedery to boost its fortunes in Asia.

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Unlike Solomon, who cut his teeth as a high yield debt originator, Elhedery is a former rates trader. However, as the architect of HSBC's "ruthless" overhaul in which he merged the corporate and investment banks and cut the M&A and equity capital markets businesses outside North America, Asia and the Middle East, he is well-placed to understand the strengths of its new slimline model. Bloomberg reports that Elhedery has been both pitching clients in Hong Kong and sending special video messages to clients in China. HSBC has also added over 12 new bankers for its China business in the past year. 

Asia is important to HSBC. In client presentations last week, the bank said 65% of its profit before tax last year came from Asia (although only 16% came from the investment bank) and that the Asian business now accounts for around 50% of revenues in its corporate and institutional bank (CIB). Growing the CIB in Asia is key to growing the wealth business, declared Jo Miyake, head of banking for Asia and the Middle East at HSBC. HSBC has a "unique superpower" in having an international network. 

There are signs of success. Bloomberg says HSBC is working on 40 Hong Kong IPOs. Last year it worked on five. 

There are also signs of not-success. HSBC has a mere 0.8% market share of IPOs in Asia ex-Japan this year, says Bloomberg. As we were first to note in February, the bank hasn't won a role on CK Hutchison Holding's $2bn dual UK-Hong Kong listing of health and beauty retailer Watson Group. Insiders at the bank have suggested that this is because HSBC cut its equity capital markets bankers in London last year. "We don't have the London capabilities any more," said one insider. "If you want the big international clients, you at least need to have the front shop." Some insiders suggested previously that the bank had fired too many "hunters" who originate deals and kept too many expensive buffaloes who execute them.

HSBC declined to comment for this article. A spokesperson told Bloomberg that the bank is a "market leader" in Asia with "strong capital markets and advisory capabilities." Someone also said that HSBC may yet win a role on Watson Group mandate, so maybe there are still people in London after all. 

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