HSBC embarks on major restructuring, names first female CFO

• HSBC has unveiled a major overhaul, announcing a new geographic setup, consolidated operations and a new CFO — the lender's first female finance chief.
• This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July.
• The bank also announced plans to restructure into four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.

HSBC on Tuesday unveiled a new geographic setup and consolidated its operations into four business units, amid a key overhaul that delivered the lender's first female finance chief.

The bank's shares were flat in early London trade Tuesday. The U.K.-listed stock is up more than 6% over the year-to-date.

As part of the restructuring outlined in regulatory filings with the Hong Kong bourse, HSBC plans to divide its operations between an "Eastern markets" branch, reuniting Asia-Pacific and the Middle East, along with a "Western markets" division, comprising the non-ringed-fenced U.K. bank, the continental European business and the Americas.

Chinese insurer Ping An, HSBC's largest shareholder with a more-than-9% stake, has previously campaigned for the spinoff of HSBC's Asian business from the rest of the group's operations — although this was ultimately rejected during the bank's annual general meeting last year.

The bank on Tuesday also announced plans to streamline its businesses in a bid to "reduce the duplication of processes and decision making." From January, it will operate through four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.

"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," Elhedery said Tuesday in a statement, adding that the shakeup 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 business (outside of Hong Kong and the U.K.), global banking and markets business, and Western markets wholesale banking operations.

UBS analysts said the magnitude of the required restructuring was currently "unknown and important."

"Aligning functions for a group with 213,978 staff involves exceptional costs, a divisional shift provides the opportunity for new CEO cost reductions," they wrote in a Tuesday note entitled "Simpler, faster, better?".

"Also important is whether this structure will prompt other changes: for example, (i) where does Australian retail (65% of loans are [residential] mortages) fit in this structure? (ii) is insurance manufacturing key to international wealth? and (iii) does HSBC need a bigger corporate Latam presence?"

Change at the top

Like many European lenders, HSBC has benefitted from a high interest rate environment since the Covid-19 pandemic, but now faces the loss of that support after the European Central Bank started loosening monetary policy in June.

Back in July, HSBC posted estimates-beating pretax profit of $21.56 billion in the first half of the year, announcing a share buyback program of up to $3 billion. The bank is set to next report its financial results on Oct. 29.

Earlier this month, the Financial Times reported that Elhedery was targeting the bank's senior management as part of cost-cutting restructuring plans that could save as much as $300 million.

Amid the managerial overhaul announced Tuesday, HSBC said Pam Kaur — currently group chief risk and compliance officer — will assume the CFO post on Jan. 1, taking over from interim Chief Financial Officer Jon Bingham.

This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July.