HSBC chief Georges Elhedery unveils sweeping overhaul of lender

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HSBC chief executive Georges Elhedery has announced an overhaul of the bank that will split it into four divisions and create a new geographic set-up separating east from west, as he seeks to cut costs and navigate geopolitical tensions.

The lender will turn its UK and Hong Kong businesses into standalone units, accounting for two of four new divisions. The other two will be “corporate and institutional banking” and “international wealth and premier banking”.

Under the plans, business in these divisions will either fall into the “eastern markets” section of Asia-Pacific and the Middle East or a “western markets” one including operations in the UK, Europe and the Americas.

The reorganisation marks a change at the UK-listed lender, separating it on east-west lines at a time of rising tension between China and the west. HSBC is based in the UK but makes most of its profits in Asia.

“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 said in a statement on Tuesday, adding that the plans would take effect on January 1.

Chinese insurer Ping An, one of HSBC’s biggest shareholders, had been pushing the bank to separate its Asia business from the rest of its operations, though its activist campaign had quietened down since shareholders rejected the move last year.

HSBC on Tuesday also named Pam Kaur, its chief risk and compliance officer, as its new chief financial officer, replacing Elhedery, who was promoted from the role this year.

The corporate and institutional banking unit, led by Michael Roberts, will include commercial banking outside the UK and Hong Kong, as well as HSBC’s markets and investment banking businesses, marking a partial merger of two of its largest divisions.

The international wealth and premier banking unit will be led by Barry O’Byrne and comprise HSBC’s premier banking businesses outside the UK and Hong Kong, as well as its private banking, asset management and insurance units.

HSBC said the move would simplify its organisational structure. It currently has three units: commercial banking, global banking and markets, and wealth and personal banking. The bank did not say if it would start cutting jobs.

The Financial Times previously reported that Elhedery was planning a $300mn cost-cutting drive that would target senior bankers.

The new Hong Kong unit will include personal banking and commercial banking and will be led by current co-CEOs of the Hong Kong unit, David Liao and Surendra Rosha. Ian Stuart will oversee the UK unit.

Roberts will lead the western markets unit, and Rosha and Liao will lead eastern markets. The bank will replace its 18-member executive committee with a new 12-member “operating committee”.

In an email to staff, Elhedery said Greg Guyett, who runs HSBC’s global banking and markets unit, will take on a new role as chair of a “strategic clients group” building relationships with the bank’s most important clients.

Colin Bell, who runs HSBC’s European operations, will leave the lender at the end of this year, as will Stephen Moss who runs its Middle East, north Africa and Turkey business.