HSBC’s Chief Executive, Georges Elhedery, has unveiled a restructuring plan for the bank, dividing it into four sections and setting up a new geographical separation between east and west sectors to reduce expenses and handle geopolitical strains. The restructure involves turning the UK and Hong Kong branches into independent entities, forming two of the four new divisions. The remaining divisions are “corporate and institutional banking” and “international wealth and premier banking”.
The bank’s operations under this new structure will be categorised into either the “Eastern markets” – encompassing the Asia-Pacific and Middle Eastern regions, or “Western markets” – encapsulating its operations in the UK, Europe, and the Americas.
This restructuring symbolises a shift in the modus operandi of the UK-based bank, segregating it along east-west lines whilst facing the ascending discord between China and the west. Despite being headquartered in the UK, the lion’s share of HSBC’s revenues comes from Asia.
The proposed changes gearing to streamline customer service and further the group’s success were declared by Elhedery in a statement on Tuesday. They are expected to be implemented from the beginning of next year.
China’s Ping An Insurance, one of HSBC’s largest shareholders who had earlier urged the bank to sever its Asian business from the rest of its operations, has been less vocal since its proposal was turned down by shareholders last year.
Furthermore, HSBC announced Pam Kaur, the current chief risk and compliance officer, as its new CFO, succeeding Elhedery who advanced from the role this year.
The corporate and institutional banking division, under the leadership of Michael Roberts, will incorporate commercial banking outside of the UK and Hong Kong, as well as HSBC’s market and investment banking business, indicating a subtle merger of two of its biggest divisions.
Barry O’Byrne will spearhead the international wealth and premier banking division, which will include HSBC’s premier banking enterprises outside the UK and Hong Kong, as well as its private banking, asset management, and insurance units.
HSBC has revealed plans to consolidate its organisational structure. The banking giant currently operates through three separate units namely: commercial banking, global banking and markets, and wealth and personal banking. It did not divulge whether this reorganisation would lead to job cuts.
The Financial Times had earlier reported upon plans by Elhedery to enact a $300 million cost-cutting initiative aimed primarily at senior bankers.
As part of the restructuring, a new Hong Kong unit will be formed amalgamating personal and commercial banking. This unit will be headed by the incumbent co-CEOs of the Hong Kong operation, David Liao and Surendra Rosha. Ian Stuart is appointed to supervise the UK segment.
The western markets division will come under the leadership of Roberts, while the eastern markets will be led by Rosha and Liao. The existing 18-member executive council will be replaced with a leaner operating committee consisting of 12 members.
In a staff-wide email, Elhedery communicated that Greg Guyett, currently at the helm of HSBC’s global banking and markets sector, will assume a new position as the chair of the strategic clients group, to nurture crucial client relationships.
HSBC’s European operations head, Colin Bell, along with Stephen Moss who oversees Middle Eastern, North African and Turkish markets, will vacate their roles at the end of the current year.
©The Financial Times Limited 2024.