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HSBC announced a new geographic structure on Tuesday, consolidating its operations into four business units, amid a major overhaul that will create the lender’s first female finance chief.
The bank’s shares were flat in early London trading on Tuesday. UK-listed stocks are up more than 6% since the beginning of the year.
As part of the restructuring outlined in a regulatory filing to the Hong Kong Stock Exchange, HSBC will create an “Eastern Markets” branch that will reunite Asia Pacific and the Middle East, and a “Western Markets” branch that will consist of non-financial markets. The plan is to divide operations into branches. – Ring-fenced British banks, businesses in continental Europe, and the Americas.
Chinese insurer Ping An, HSBC’s largest shareholder with more than 9% stake, had previously campaigned to separate HSBC’s Asian operations from the rest of the group, which ultimately led to the bank’s decision last year. It was rejected at the annual general meeting.
The bank also announced plans on Tuesday to streamline its operations to “reduce duplication of processes and decision-making.” From January, it will operate through four divisions: Hong Kong, UK, International Wealth and Premier Banking, Corporate Banking and Institutional Banking.
“The new structure will result in a simpler, more dynamic and agile organization as we continue to focus on delivering on our consistent strategic priorities,” Elhederi said in a statement Tuesday. will help drive HSBC’s “next steps”, he added. stages of growth. ”
The bank’s new Corporate and Institutional Banking division will combine commercial banking (outside Hong Kong and the UK), global banking and markets, and Western markets wholesale banking.
Analysts at UBS said the scale of the necessary restructuring is currently “unknown but significant.”
“Although the functional adjustment of a group of 213,978 staff is costly, the divisional changes provide a cost-saving opportunity for the new CEO,” they wrote in a note on Tuesday, “Simpler, Faster. , better?”
“What is also important is whether this structure drives other changes, such as (i) where is Australia’s retail industry (65% of lending [residential] Does a mortgage loan fit into this structure? (ii) Is insurance manufacturing the key to international wealth? (iii) Does HSBC need to further develop its presence as a Latin American company?”
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Like many European financial institutions, HSBC has benefited from a high interest rate environment since the COVID-19 pandemic, but has now seen its support reduced as the European Central Bank began easing monetary policy in June. facing loss.
In July, HSBC posted a better-than-expected pre-tax profit of $21.56 billion in the first half and announced a share buyback program of up to $3 billion. The bank is scheduled to announce its next financial results on October 29th.
Earlier this month, the Financial Times reported that Mr. Elhederi was targeting the bank’s senior management as part of a cost-cutting restructuring plan that could save up to $300 million.
Amid a management shakeup announced on Tuesday, HSBC announced that Pam Kaul, currently group chief risk and compliance officer, will take over the CFO post from January 1, replacing interim chief financial officer John Bingham. announced that he would be appointed.
This is the second strong management shake-up for HSBC in recent months, after former finance chief Georges Erhedery was appointed group chief executive in July.
