Written by Selena Lee, Lawrence White, Sinead Cruz
HONG KONG/LONDON (Reuters) – HSBC has made some changes in a sweeping restructuring under new Chief Executive Georges Ergederi that includes appointing the bank’s first female finance chief. It consolidated its operations and divided its geographical base into east and west.
Under the reforms announced on Tuesday, HSBC will combine some of its commercial and investment banking operations. A new leadership structure has also been introduced “to maximize our potential and drive future success,” Elhederi said in a memo to staff.
He appointed Pam Kaul, 60, formerly HSBC’s chief risk and compliance officer, as chief financial officer.
The review will help HSBC, which employs around 214,000 people around the world, eliminate duplicative roles and focus on reducing costs and increasing revenue as profit margins decline due to falling interest rates worldwide. This was done in the midst of efforts to move the country to Asia.
The group has divided its operations into four business areas: UK, Hong Kong, Corporate and Institutional Banking, and Wealth Banking.
It is also reorganizing its geographic structure by merging Asia Pacific and the Middle East under the Eastern Market umbrella, which will now consist of Continental Europe, the Americas, and UK operations excluding retail banking.
With the overhaul, Elhederi is also trying to tackle one of HSBC’s most intractable problems.
The company’s commercial bank serves more than 1.2 million business customers, from start-ups to large corporations, and has long held the potential for soaring profits if these customers can be persuaded to buy more products. are.
But the division’s executives are trying to protect customers from cross-selling activity by investment bankers in HSBC’s global banking unit, bank officials have previously said.
By merging its two divisions, excluding Hong Kong and the UK, into the new Corporate and Institutional divisions, El Hederi will drive closer collaboration and drive the lender’s drive to cross-sell more products to internationally focused clients. I hope to achieve my recent focus.
HSBC did not disclose the expected cost savings or the number of jobs affected, but more details will be revealed when the bank releases its third-quarter results on October 29. There is a possibility that it will happen.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Cost reduction is a major driver of these changes, with the potential for simplified geographies to bring new efficiencies. is high,” he said.
HSBC shares were flat on Tuesday, while the FTSE 100 index fell 0.6%. HSBC shares rose 12% last year, lagging the 33% rise in the European banking benchmark STOXX index.
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moving parts
Analysts said the overhaul of the bank’s structure appeared radical but did not fully address the bank’s challenges of maintaining profitability amid falling global interest rates. said.
“Today’s announcement is just a move around different parts of the group and doesn’t change the overall picture,” said Ben Thoms, an analyst at RBC Capital Markets.
“Given that the bank is looking to cut costs to offset revenue pressures, the real question waiting for the market is: which divisions of the group may be next in line? and how much this restructuring will cost the bank.”? ”
The company’s price-to-book ratio of 0.89, a measure of relative valuation, is among the most expensive among European peers such as Barclays and Deutsche Bank (which trade at 0.52 and 0.46, respectively).
As well as structural reforms, HSBC announced a number of senior management changes.
The company announced that the number of members of its management committee, the company’s main decision-making body, will be reduced from 18 to 12, and the new name will be the “Group Management Committee.”
In other key leadership changes, Greg Guyett, CEO of Global Banking and Markets, has become chair of the newly created Strategic Customer Group.
Colin Bell, head of Europe, who was once considered a potential CEO candidate, is leaving the company, as is Steven Moss, head of Middle East, according to an internal memo.
(Reporting by Serena Lee in Hong Kong, Sinead Crews and Lawrence White in London; Additional reporting by Rooshni Nair in Bengaluru and Scott Murdoch in Sydney; Editing by Edwina Gibbs and Susan Fenton)
