HSBC announced a major restructuring under new CEO Georges Elhedery, merging operations and reorganizing its geographic footprint into East and West. The revamp includes the appointment of Pam Kaur as the bank's first female chief financial officer.
The restructuring aims to streamline commercial and investment banking businesses and focuses on enhancing profitability in light of declining global interest rates. HSBC will operate through four main divisions: UK, Hong Kong, corporate and institutional banking, and wealth banking. The Asia Pacific and Middle East regions will be grouped under Eastern Markets, while Western Markets will encompass Continental Europe, the Americas, and the UK (excluding retail banking).
This overhaul seeks to address longstanding issues within HSBC's commercial banking division, which serves over 1.2 million business clients. By integrating this division with investment banking (excluding Hong Kong and the UK), Elhedery aims to foster collaboration and promote cross-selling of products.
While specific cost savings and job impacts remain unannounced, analysts suggest that the restructuring primarily addresses organizational efficiency rather than the broader challenges posed by falling interest rates. HSBC's shares remained steady on the announcement day, with the FTSE 100 index declining by 0.6%. Over the past year, HSBC's shares have increased by 12%, lagging behind the 33% rise in the European banking index.
In addition to the structural changes, HSBC will reduce its executive committee from 18 to 12 members, now termed the Group Operating Committee. Key departures include Colin Bell, head of Europe, and Stephen Moss, head of the Middle East.