HSBC’s new CEO, Georges Erhedery, has split the bank into four businesses and created a new geographic divide that divides operations into east and west, in a bid to cut costs and deal with rising geopolitical tensions. announced a review of banks introducing the system.
The bank also announced the promotion of Chief Risk and Compliance Officer Pam Kaul to Chief Financial Officer, making her the first woman to hold the role in HSBC’s 159-year history. A qualified Chartered Accountant, she joined the firm in 2013 as Head of Audit and has nearly 40 years’ experience working in banks in the UK, US and Germany.
Mr Elhederi said the bank’s home markets of the UK and Hong Kong, corporate and institutional banking, wealth banking and premier banking are the bank’s core strengths.
The UK and Hong Kong will become separate divisions, making up two of the four businesses. Hong Kong will include personal and commercial banking under David Liao and Surendra Roche, while the new UK business, run by Ian Stewart, will include personal banking including First Direct and M&S Bank. and commercial banking.
HSBC will combine its global commercial and institutional banking operations under Michael Roberts and create a new international high net worth and premier banking business under Barry O’Byrne.
The London-headquartered bank is on a recruitment drive to recruit hundreds of staff to serve Britain’s wealthy clients as it looks to tap into a larger part of the wealth management market.
It currently has three main divisions: Commercial Banking, Global Banking and Markets, and Wealth Banking and Personal Banking.
Under the new geographic settings, the Eastern market division will bring together Asia Pacific and the Middle East, while the Western market division will consist of the United Kingdom, the rest of Europe, and the Americas. The move comes amid rising tensions between China and the West.
Mr Elhederi, who learned Chinese during a six-month sabbatical two years ago, said: “The changes we are announcing today will make it easier for our colleagues to serve our customers and drive the group’s future success. I guess so.” The new structure will result in a simpler, more dynamic and more agile organization.
“By making these changes, we will be able to focus more on increasing our leadership and market share in businesses where we have a clear competitive advantage and the greatest growth opportunity.”
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The changes aim to reduce duplication in processes and decision-making and are scheduled to take effect on January 1st. HSBC also suspended hiring in some divisions and told bankers to cut back on travel and entertainment, according to Bloomberg.
Chinese insurer Ping An, one of HSBC’s largest shareholders, had pushed in recent years to separate its Asian operations from the bank’s other businesses, but investors rejected the proposal last year.
