HSBC Disbands Geopolitical Risk Team Amid U.S.-China Tensions

HSBC Holdings is set to disband its geopolitical risk team, which was responsible for assisting the executive team and occasionally clients in navigating the escalating global instability. This move will affect fewer than 10 positions across Asia and Europe, but the timing is notable as it coincides with the escalation of U.S.-China tensions and the potential for new variables in global trade flows with the return of Trump to power.

HSBC has stated that under the overall strategy of streamlining operations and reducing costs, the existing team will absorb the risk consulting functions. This decision sets HSBC apart from some of its competitors. Recently, JPMorgan Chase established a geopolitical center to provide in-depth analysis of hotspots such as the Middle East and Ukraine. Goldman Sachs and Lazard are also expanding their geopolitical consulting services to help clients gain strategic advantages in turbulent environments. Despite the slowdown in transactions due to geopolitical uncertainty, the overall revenue of the five major U.S. investment banks remains nearly 40% lower than in 2021. The demand for accurate political intelligence is not only not weakening but may be accelerating.

HSBC insists that it has not abandoned helping clients manage global risks but has changed its approach. "We will continue to focus on helping clients cope with the complex and changing international environment," the bank said in a statement. However, in light of recent events where Wells Fargo temporarily suspended travel to China due to restrictions on executives leaving the country, the unease in the banking industry is evident. Whether this streamlining will be effective or expose HSBC to more risks will be one of the most closely watched developments in the banking industry in the coming months.