HSBC Holdings announced on Tuesday that it would merge certain aspects of its commercial and investment banking operations as part of a significant reorganization led by new CEO Georges Elhedery. This move aims to reduce expenses while enhancing returns. The new leadership structure will feature Pam Kaur as the bank’s first female chief financial officer, a decision Elhedery communicated to staff in a memo, stating it is intended to “unleash our full potential and drive success into the future.”
The organization will restructure into four distinct business lines: the UK, Hong Kong, corporate and institutional banking, and wealth banking. Elhedery is addressing a longstanding challenge for HSBC, specifically leveraging its commercial bank that serves over 1.2 million business customers ranging from startups to large corporations. The goal is to increase profitability by encouraging these clients to purchase additional products. Previously, executives have been careful to shield their clients from cross-selling efforts initiated by the Global Banking division.
The merger of the two divisions into a new corporate and institutional division—excluding operations in Hong Kong and the UK—is Elhedery’s strategy to enhance collaboration and meet the bank’s recent commitment to cross-sell more products to internationally oriented customers. The bank has not disclosed expected cost savings or potential job impacts, with further details anticipated during its third-quarter results announcement on October 29.
The new corporate and institutional banking unit will incorporate the combined commercial banking and global banking and markets business, alongside western wholesale banking operations, including those in Europe and the Americas. HSBC shares showed minimal movement, declining by only 0.1% in Hong Kong trading. Ben Toms, an analyst at RBC Capital Markets, noted that the announcement involved rearranging various parts of the group without altering the overall strategy. However, he highlighted the market’s interest in identifying which parts of the Group might face cost-cutting measures and the financial implications of the restructuring.
In conjunction with the structural changes, HSBC revealed several senior management adjustments. Pam Kaur, who previously served as the chief risk and compliance officer, will succeed as CFO. She has been with HSBC since April 2013, beginning as group head of internal audit. Furthermore, Greg Guyett will transition from his role as CEO of Global Banking and Markets to the newly established position of Chair, Strategic Clients Group.
Additionally, Colin Bell, head of HSBC Europe and once a potential CEO candidate, will be departing from the bank, as will Stephen Moss, head of the Middle East, according to an internal memo. HSBC, employing approximately 214,000 individuals globally, has been eliminating redundant roles and reducing its presence in Western markets such as the United States, France, and Canada, while concentrating on its operations in Asia and other regions where it has substantial presence.
