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HSBC on Tuesday unveiled a new geographic setup and consolidated operations into four business units, amid a key overhaul delivered by its first female finance chief.
The bank’s shares were flat in early London trading Tuesday. Its UK-listed shares are up more than 6% year-on-year.
As part of the restructuring described in a regulatory filing with the Hong Kong stock exchange, HSBC plans to divide its operations between the “Eastern market” branch, combining Asia-Pacific and the Middle East, along with the “Western market” division, which includes non-ringed-fenced banks. UK, continental European and American business.
Chinese insurer Ping An, HSBC’s largest shareholder with a stake of more than 9%, has previously campaigned for a spin-off of HSBC’s Asian business from the rest of the group’s operations – although this was ultimately rejected at the bank’s annual general meeting last year.
The bank on Tuesday also announced plans to streamline its business in an effort to “reduce duplication of processes and decision-making.” From January, it will operate through four divisions: Hong Kong, UK, international wealth and primary 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 Tuesday in a statement, adding that the shakeup will help HSBC in its “next phase of growth.” “
The bank’s new corporate and institutional banking unit will combine its commercial banking business (outside Hong Kong and the UK), global markets and banking business, and Western market wholesale banking operations.
UBS analysts said the extent of the restructuring required is now “unknown and significant.”
“Aligning functions for the group with 213,978 staff involved in exceptional costs, the division shift gives the opportunity to reduce the costs of the new CEO,” they wrote in a note on Tuesday titled “Simpler, faster, more?”.
“Also important is whether this structure will lead to other changes: for example, (i) where does Australian retail (65% of loans are mortgages (housing)) fit into this structure? (ii) is insurance manufacturing key to international wealth? ( iii) does HSBC need a bigger Latam company?”
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Like many European lenders, HSBC has benefited from a high interest rate environment since the Covid-19 pandemic, but is now set to lose that support after the European Central Bank begins to loosen monetary policy in June.
Back in July, HSBC posted a pre-tax profit of about $21.56 billion in the first half of the year, announcing a share buyback program of up to $3 billion. The bank will report its next financial results on October 29.
Earlier this month, the Financial Times reported that Elhedery was targeting the bank’s senior management as part of a cost-cutting restructuring plan that could save $300 million.
In the midst of a managerial overhaul announced on Friday, HSBC said Pam Kaur – currently the group’s chief risk and compliance officer – will assume the post of CFO on January 1, taking over from interim Chief Financial Officer Jon Bingham.
It is the second heavyweight leader for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group in July.