HSBC Restructuring Under New CEO

By Selena Li, Lawrence White and Sinead Cruise
HONG KONG/LONDON (Reuters) – HSBC has initiated a major restructuring under its new CEO, Georges Elhedery, merging operations and reorganizing its geographic footprint into East and West. This revamp includes the appointment of the bank's first female finance chief, Pam Kaur, 60, previously the chief risk and compliance officer.

The restructuring aims to streamline commercial and investment banking operations to enhance efficiency and reduce costs, driven by a need to focus more on Asia amid declining global interest rates. HSBC's operations will be divided into four business lines: UK, Hong Kong, corporate and institutional banking, and wealth banking.

Geographically, Asia Pacific and the Middle East will form the Eastern Markets, while Western Markets will include Continental Europe and the Americas, along with the UK (excluding retail banking).

Elhedery’s strategy seeks to address longstanding challenges in HSBC's commercial banking sector, encouraging cross-selling of products among its large client base. However, there are concerns that these changes do not tackle the core problems of profitability in a low-interest environment.

The bank has not disclosed anticipated cost savings or potential job impacts but may share more insights during its upcoming third-quarter results on October 29. Current market sentiments note that while HSBC shares are stable, they've underperformed relative to European banking benchmarks.

Additional Structural Changes

Along with the overarching restructure, HSBC has announced significant senior management changes, reducing its executive committee from 18 to 12 members, now titled the Group Operating Committee. Greg Guyett, previously CEO of Global Banking and Markets, has taken the newly created role of Chair of the Strategic Clients Group. The departure of Colin Bell, head of Europe, and Stephen Moss, head of the Middle East, has also been confirmed.

Overall, while HSBC's restructuring indicates a considerable internal shift, analysts suggest more decisive actions are needed to ensure long-term profitability amidst global economic pressures.