Banking giant HSBC has revealed it is kicking off a round of jobs cuts in the UK and worldwide as it seeks to slash costs by 1.5 billion US dollars (£1.2 billion) by the end of 2026.

The group said it will look to reduce its global staff costs by 8%, with senior managers and those in its newly merged wholesale corporate and institutional arm set to be in the line of fire.

HSBC warned that the UK head office is likely to bear the brunt of the cuts, but declined to give details of how many jobs will go, or provide a breakdown by country.

Group chief executive Georges Elhedery said the group is “not tracking headcount reduction” and is instead focusing on lowering costs.

He stressed that the bank’s 211,300-strong global workforce will not fall by as much as 8%, because many of the jobs going will be at a more senior level and therefore more highly paid.

But he added that the cuts will be “more borne by the head office in the UK”.

The group will strip out roles that are duplicated as a result of its recent overhaul, which has seen it reorganise into eastern and western units and merge two of its three main divisions, stripping out a layer of senior bankers.

HSBC is also withdrawing from mergers and acquisitions banking activity in the UK, Europe and the US.

Details of the staff cuts came as HSBC also revealed in its annual report that it plans to increase Mr Elhedery’s total pay package to a potential maximum of £15.2 million a year for 2025 as part of a pay overhaul.

It held its bonus pool largely steady at 3.8 billion US dollars (£3.01 billion) for 2024, up slightly from 3.77 billion US dollars (£2.99 billion) in 2023.

The bank has undergone significant change in recent months under the leadership of Mr Elhedery, who has spearheaded an overhaul of its global structure as part of plans to drastically reduce costs and focus on more profitable parts of the business.

Its reorganisation aims to generate cost reductions of 300 million dollars (£238 million) this year with the commitment to the 1.5 billion dollars (£1.2 billion) annualised reduction in the cost base expected by the end of 2026.

To achieve the reduction, the bank said it plans to incur 1.8 billion dollars (£1.4 billion) in severance and other upfront costs over the next two years, as well as redeploying around 1.5 billion dollars (£1.2 billion) from “non-strategic activities” to areas where it has “a clear competitive advantage”.

Mr Elhedery said: “Our strong 2024 performance provides firm financial foundations upon which to build for the future, as we prioritise delivering sustainable strategic growth and the best outcomes for our customers.

“I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy. We are creating a simple, more agile, focused bank built on our core strengths.”

He continued: “I have put in place a smaller, core team of exceptionally talented leaders driven by a growth-orientated mindset and a firm focus on dynamically managing our costs and capital.

“We are embedding this approach across the organisation to ensure we are continually focused on these two important principles.”

The UK’s largest bank unveiled a better-than-expected 6.6% rise in pre-tax profits to 32.3 billion US dollars (£25.6 billion) for 2024, up from 30.3 billion dollars (£24.1 billion) in 2023.

Reported profit before tax rose by 1.3 billion dollars (£1 billion) to 2.3 billion US dollars (£1.8 billion) in the final quarter of 2024, compared with the same period a year ago.

Revenue throughout the year remained stable at 65.9 billion dollars (£52.2 billion) while operating expenses rose by one billion dollars (£793 million).