HSBC Launches Largest Restructuring in a Decade Under New CEO
HSBC has unveiled its most significant restructuring in over a decade as new CEO Georges Elhedery seeks to simplify the bank’s structure and cut costs.
As part of the overhaul, the lender will combine its global commercial and institutional banking operations and create a new international wealth and premier banking unit. The changes also include the appointment of Pam Kaur as HSBC’s first-ever female Chief Financial Officer, effective January 1, 2024.
The restructuring comes as HSBC aims to reduce complexity and increase agility in the face of changing economic conditions, including falling interest rates globally. Elhedery stated that the new structure will result in a “simpler, more dynamic, and agile organization” and help the bank focus on its strategic priorities. However, the announcement did not specify how many jobs might be cut or the exact cost savings expected, leaving investors with questions about the financial impact of the changes.
As part of the revamp, HSBC is consolidating its geographic operations into two regional units: an Eastern region encompassing Asia Pacific and the Middle East, and a Western region covering Europe, the Americas, and the non-ring-fenced UK bank. In addition, Hong Kong and the UK will now operate as standalone units.
The restructuring will also see HSBC reducing its top executive team from 18 to 12 members. While some key executives are departing as part of the changes, Greg Guyett, CEO of Global Banking and Markets, will take on a new role as Chair of the Strategic Clients Group.
Despite the sweeping changes, HSBC’s shares were little changed in early London trading. Analysts noted that the restructuring appears to be aimed at simplifying the bank’s operations but left uncertainty about its long-term impact on profitability.
With the restructuring, HSBC is also following a model recently adopted by Citigroup, which eliminated regional management roles as part of its own cost-cutting efforts. HSBC is expected to provide further details on the financial implications of the changes when it reports its full-year results in February 2024.
