Fear at HSBC as the old guard lose their protector

Samir Assaf's departure from HSBC isn't a done deal, but the Financial Times' article this morning made it sound as certain as this sort of thing can be before an official announcement is made. Asaf is "definitely" going to be replaced, said one unnamed 'advisor', and when that happens an "axe" will be taken to the global banking and markets division he's led since 2010. That's going to sound ominous if you're one of Assaf's men.

And there are many of Assaf's men. In the nine year period he's led the investment bank and the quarter of a century he's been at HSBC, Assaf has had plenty of time to make careers and to elevate his own coterie. Insiders at the bank point to several people in Assaf's inner circle, many of them leading the trading businesses that HSBC is likely to prune when interim chief executive Noel Quinn unveils his new strategic plan in February. 

They include, for example, Marwan Dagher, the head of institutional sales who was promoted into the role by Assaf in 2011 and who's been at HSBC for around two decades like Assaf. There's also Elie El Hayek, the global head of fixed income, who joined in 1997; or Mehmet Emin Mazi, the global head of traded credit, who joined in 1995; or Georges Elhedery, the current head of the global markets business who previously led the Middle East, North Africa and Turkey business and who joined in 2005. 

"If you look at the DNA at the top of HSBC, it's been shaped by Assaf," says one source. 

As we noted previously, HSBC's global markets division didn't do badly compared to rivals' in the first nine months of 2019. However, profitability in the unit varies widely by region: Europe made a loss of $135m in the third quarter; Asia made a profit of nearly $1bn. 

As Quinn looks to cut costs, he's already indicated that highly paid staff in Europe are in his sights. Five employees at the bank earned over $7m in 2019. It's not clear who they are, but senior traders are surely a possibility. As capital is diverted away from global banking and markets, cutting those heads could look like a quick win.

Assaf's exit could also open opportunities for those below him. Financial News suggests that Elhedery could be promoted as Assaf's replacement, but then so could others - including Thierry Roland, the head of global markets Europe (another HSBC near-lifer who joined in 2000), or Greg Guyett (an American who joined last year after 30 years at JPMorgan). Assaf's exit hasn't been confirmed by HSBC, so speculation may be premature - but the hierarchy at the top of the bank is almost certainly about to be disrupted. There will be winners, but there will be losers too. 

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