Why New CEO Georges Elhedery is Restructuring HSBC

HSBC CEO Georges Elhedery has announced an overhaul of the bank that will split it into four divisions and will separate east from west.

Under the plans, HSBC will split its business into an “eastern markets” section of Asia-Pacific and the Middle East and a “western markets” section, including operations in the Americas and Europe.

Separately, HSBC will turn its UK and Hong Kong businesses into standalone units, accounting for two of the four new divisions.

The lender will also combine its global commercial and institutional banking operations under Michael Roberts and it is creating a new international wealth and premier banking business that will be overseen by Barry O’Byrne.

The reorganisation will take effect on 1 January 2025.

HSBC currently has three global units: commercial banking, global banking and markets, and wealth and personal banking.

Taken together, this reorganisation means HSBC is embarking on its biggest restructuring in at least a decade. 

“The changes that we are announcing today will make it easier for our colleagues to serve our customers and drive the future success of the group,” Elhedery announced.

“The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged.”

Why Elhedery is restructuring HSBC

Elhedery has been under pressure to cut costs in order to protect the firm’s profit margins as central banks worldwide lower borrowing costs. 

Analysts have suggested he will need to find ways to save up to US$2 billion in costs over the coming years. 

The reorganisation also navigates the complexities of deteriorating Chinese/US relations, which could impact HSBC’s operations. 

First female CFO

HSBC also named Pam Kaur, its chief risk and compliance officer, as its new Chief Financial Officer, replacing Elhedery, who was promoted from the role in July.

Kaur will become the first female finance director in the bank’s 159-year history. She joined in 2013 as audit head before overseeing risk and compliance.

“She is highly respected and well known to the board and was the unanimous choice,” Chairman Mark Tucker said in a statement.

The changes will also cut the the number of executives who sit on the newly named key operating committee from 18 to 12. 

“I have viewed HSBC’s global operations as too complex and too sprawling geographically,” said Michael Makdad, senior equity analyst at Morningstar told Bloomberg. “This reorganisation to simplify the business, and separate Hong Kong and the UK into their own businesses, should be positive. It may also help answer the concerns of shareholders in Asia, who argued a few years ago that such a separation could improve returns.”

Who is HSBC CEO George Elhedery?

Elhedery’s appointment, effective last month, marks a rapid ascent for the Lebanese, French-educated banker, whose challenge now is to show that he can further grow Europe’s biggest bank.

Georges Elhedery joined HSBC in 2005 and has worked in financial services for nearly three decades. Born in Lebanon, he moved to Paris to study engineering and later obtained a postgraduate degree in statistics and economics. 

On his appointment as CEO, HSBC's Group Chairman Sir Mark Tucker praised Elhedery as an exceptional leader with a track record of driving growth, simplification, and cost containment.