HSBC is preparing for a notable restructuring aimed at merging its commercial banking sector with its global banking and markets division, a move that could result in substantial job reductions among long-tenured senior staff.

Although the bank declined to comment on reports indicating potential savings of approximately $300 million through this consolidation, it had previously contemplated a similar merger in 2020, which was postponed due to the Covid-19 pandemic.

Georges Elhedery, who assumed the role of chief executive in September, is facing pressure to implement cost-cutting measures at Europe’s largest bank, which has seen its stock performance lag behind competitors over the last nine months.

According to the Financial Times, which first broke the news, preparations for this internal merger are progressing rapidly, with an official announcement anticipated before the end of the month. This uncertainty is reportedly affecting employee morale.

HSBC stands as one of the world’s foremost lenders, prominently positioned in Hong Kong and Greater China, employing around 214,000 individuals globally. In the first half of 2024, the bank reported profits of $21.6 billion, a slight decline from previous figures, and currently holds a market valuation of £122 billion.

A source cited by the Financial Times suggested that this merger would streamline management structures, stating, “It will reduce the top management layers. It’s going to affect the senior people and some of the larger roles. That’s the most expensive layer, and that’s where the costs are.”

The blending of these divisions is expected to make many senior positions redundant, as each country where HSBC operates would require a singular set of senior divisional leaders instead of maintaining two separate groups.

Last year, expenses in the commercial banking sector surged by 12% to $3.9 billion, while costs in global banking and markets rose by 3% to $4.9 billion, reflecting the influence of some of the highest-salaried investment bankers and dealmakers.

Elhedery, succeeding Noel Quinn, has already initiated changes within the executive team, announcing the departure of Nuno Matos, the head of wealth and personal banking, slated for next year, who was considered a potential challenger for the CEO position.

Concerns regarding growth in China have adversely impacted HSBC, with its shares increasing by only 6.5% year-to-date, contrasting sharply with stronger gains of 24% at JP Morgan Chase, 30% at Goldman Sachs, 50% at Barclays, and 27% at Standard Chartered.