HSBC's global business integration is divided into four main business segments: Hong Kong business, UK business, corporate and institutional banking, international wealth management, and premier banking, effective from next year. Some analysts believe that as central banks around the world begin to cut interest rates, large banks are facing profit pressure and have to take cost-cutting measures to sustain operations
Major Moves Inside HSBC!
On Tuesday, HSBC Holdings announced that it will optimize its organizational structure. The company has decided to integrate its global operations into four main business lines starting from January 1, 2025: Hong Kong operations, UK operations, Corporate and Institutional Banking, International Wealth Management, and Premier Banking.
It is reported that this is the largest organizational restructuring at HSBC in the past decade. Specifically:
The businesses in China Hong Kong and the UK will be split into separate parts, while the commercial and institutional banking businesses outside of these two will be merged into a new division.
Two new regional divisions will be established: the Eastern Regional Division covering the Asian and Middle Eastern markets, led by David Liao and Surendra Rosha; the Western Regional Division covering the UK and European and American markets, along with Corporate and Institutional Banking, will be overseen by Michael Roberts.
A new International Wealth Management and Premier Banking business will be established, involving HSBC's premium banking operations outside of China Hong Kong and the UK, as well as private banking, asset management, and insurance businesses, led by Barry O'Byrne.
The "Executive Committee" consisting of 18 members will be reorganized into an "Operating Committee" consisting of 12 members.
HSBC Holdings CEO Georges Elhedery stated in the announcement:
"The new structure will bring a simpler, more dynamic, and agile organization as we focus on executing our strategic priorities, which remain unchanged."
The statement also mentioned that HSBC will appoint Pam Kaur as its new Chief Financial Officer, making her the first female CFO in the group's history.
As part of the restructuring plan, some key executives including Stephen Moss, Head of Middle East and North Africa Business, and Colin Bell, Head of European Business, will also depart.
Trend of Cost Reduction in Large Banks?
In early September this year, Elhedery (who has been the Group CFO since early 2023) was appointed as the new CEO of HSBC Group to succeed Noel Quinn.
Upon taking office, Elhedery began implementing a series of cost-cutting measures, with plans to reduce costs potentially up to $2 billion as previously reported by Bloomberg. According to the Financial Times, Elhedery also plans a $300 million cost reduction plan targeting senior bankers.
Analysts suggest that as central banks around the world begin to cut interest rates, large banks face profit pressures and have to take cost-cutting measures to maintain operations.
Last year, as one of HSBC's competitors, Citigroup also opted for a large-scale business restructuring, resulting in up to 20,000 job cuts.
Some analysts point out that HSBC may incur restructuring costs during the implementation of some changes. It is estimated that these costs could range from $100 million to "low tens of billions of dollars."
In recent years, HSBC has accelerated the shift of its business focus towards Asia while tightening operations in Western markets such as the US, Canada, and France, as Asia is currently the group's main source of profits