Chief Executive Officer Georges Elhedery will have to make a series of decisions in the coming weeks over whether to acquire more desk space for the lender’s staff in London, Bangalore, Hyderabad and Guangzhou, people familiar with the matter said, asking not to be identified discussing internal deliberations. Securing the required space to support a return to three days a week in those cities would cost around $200 million a year, one of the people said.

A representative for HSBC declined to comment.

For Elhedery, who’s spent the past few months driving the biggest organizational overhaul HSBC has seen in decades, the question of office space would be the next crucial issue to tackle as the lender prepares to ditch its pandemic-era hybrid-work policies. The London-based banking giant is considering asking all its employees to work from one of its offices at least three days a week.

The potential extra expenditure is more than 10% of the money HSBC is hoping to save from its ongoing global restructuring that has seen it combine its commercial and investment banking units and shutter its mergers and acquisitions and equity underwriting divisions in the US, UK and continental Europe. 

Expansion of the office footprint follows several years in which HSBC had aimed to shrink its global real estate portfolio by 40%. Former CEO Noel Quinn even got rid of his own private office as part of the move toward more hybrid working and converted the bank’s executive floor in its London headquarters into more meeting room space, as he opted to hot-desk.

Desk Shortage

Europe’s largest financial group is already facing a potential 7,700-desk shortfall when it moves to a new headquarters in the City of London. It also needs to square up to the challenge of finding more space for its employees in India and China.

With the three-days-in-office rule on the cards, HSBC needs to find almost 3,000 additional desks in Bangalore, the Indian city where it employs about 12,500 in its global services and tech units, the people said. 

On top of this, a further 3,500 desks will be needed in the southern Indian city of Hyderabad, where it employs 12,000 more in tech and support roles for the bank’s global operations, they said. A more than 3,000-desk shortfall is also forecast in Guangzhou, the southern Chinese port city, where the bank has more than 14,500 staff employed in similar roles.

Failure to acquire the additional capacity would mean HSBC’s return-to-office mandate could be dead on arrival, with thousands of staff unable to find desk space at the bank’s buildings.

In London, HSBC is due to begin the move out of its Canary Wharf headquarters next year to relocate to a new, but smaller building in the City. If the bank were not to increase its office footprint at the same time, it would mean London-based staff wouldn’t be able to find desk space for more than a day and a half each week, according to people familiar with the situation.

To address the shortfall, the bank is already in talks to lease several floors near its current headquarters and has put in an offer to take up all of the empty space at 40 Bank Street, Bloomberg News reported this month. It is also considering retaining some satellite offices it had earlier planned to give up.

In India, HSBC is hoping to have new offices ready for staff in early 2027, but to hit these deadlines it will need to begin signing deals by September, while in China a lease for more space could be signed over the summer.

The short deadlines highlight the need for Elhedery and his management team to quickly agree on the new return-to-office strategy to enable the bank to begin dealing with the potential capacity issues.

In its hunt for space, HSBC is likely to run into competitors ranging from Wall Street majors to smaller rivals who are similarly seeking to scale up their carpet area after slashing real estate in the aftermath of the pandemic. But they are also likely to contend with a supply squeeze created by cautious developers grappling with soaring construction costs and higher interest rates.