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HSBC on Tuesday unveiled a new geographic setup and consolidated its operations into four business units, amid a major overhaul that gave the lender its first female finance chief.
The bank’s shares were flat in early trading in London on Tuesday. Shares listed in the United Kingdom have risen more than 6% this year.
As part of the restructuring detailed in regulatory filings with the Hong Kong Stock Exchange, HSBC plans to split its operations between an ‘Eastern Markets’ division, reuniting Asia-Pacific and the Middle East, along with a ‘Western Markets’ division markets’, consisting of non-European markets. -ring-fenced British bank, continental European business and America.
The Chinese insurer Ping An, HSBC’s largest shareholder with a stake of more than 9%, has done this before campaigned for the spin-off of HSBC’s Asian operations from the rest of the group’s operations – although this was ultimately rejected during the bank’s consultations. annual general meeting last year.
The bank also announced plans on Tuesday to streamline its operations in an effort to “reduce the duplication of processes and decision-making.” From January it will operate from four divisions: Hong Kong, UK, international wealth and premier banking, and corporate and institutional banking.
“The new structure will result in a simpler, more dynamic and agile organization as we focus on executing our strategic priorities, which remain unchanged,” Elhedery said in a statement on Tuesday, adding that the shake-up will help propel HSBC in its “next” phase of growth.”
The bank’s new corporate and institutional banking unit will bring together its commercial banking activities (outside Hong Kong and Great Britain), global banking and markets activities and wholesale banking activities in Western markets.
UBS analysts said the extent of the restructuring required is currently “unknown and significant”.
“Aligning functions for a group with 213,978 employees comes at an exceptional cost, a divisional shift offers the opportunity for cost savings for new CEOs,” they wrote on Tuesday in a note titled “Simpler, Faster, Better?” .
“Also important is whether this structure will lead to other changes: (i) where is the Australian retail sector (65% of loans [residential] mortgages) fit into this structure? (ii) is insurance production the key to international prosperity? and (iii) does HSBC need a larger Latin American presence?”
Change at the top
Like many European lenders, HSBC has benefited from the high interest rate environment since the Covid-19 pandemic, but is now facing the loss of that support after the European Central Bank began easing monetary policy in June.
In July, HSBC reported pre-tax profits of $21.56 billion in the first half of the year, beating earnings, while announcing a share buyback program of up to $3 billion. The bank will publish its financial results on October 29.
Earlier this month the The Financial Times reports this that Elhedery targeted the bank’s senior management as part of cost-cutting restructuring plans that could save as much as $300 million.
Amid the governance overhaul announced on Tuesday, HSBC said Pam Kaur – currently the group’s chief risk and compliance officer – will assume the role of CFO on January 1, taking over from interim Chief Financial Officer Jon Bingham.
This is the second major leadership change for HSBC in recent months, after former finance boss Georges Elhedery was appointed group CEO in July.