Tensions between China and the West push HSBC to overhaul bank

The new boss of HSBC has announced a sweeping restructuring that internally divides the Asia-focused bank’s operations in two to cut costs and help it negotiate a growing geopolitical split between China and the West.
Georges Elhedery, who took charge of the London-based banking giant last month, said his overhaul of the sprawling group “will result in a simpler, more dynamic and agile organisation”.
His changes involve a revamp of the lender’s geographical structure to create an eastern markets business that incorporates its Asia-Pacific and Middle Eastern operations, and a western markets business that houses its UK high street unit as well as its operations in Europe and the United States.
He is also reorganising its main business lines into four groups, which will result in a merger of its commercial banking and investment banking operations that had long been run as distinct units. These two operations will now form the corporate and institutional banking division, while the group’s operations in Hong Kong and the UK will form two other units. The fourth division will house its wealth management and so-called premier banking businesses.
It represents the biggest revamp of the way the vast banking group has been organised for more than a decade and comes at a crunch time for HSBC. The changes take effect from the beginning of next year.
Like other lenders, HSBC has been buoyed by rising interest rates since late 2021 but now that borrowing costs are falling, its profits, which reached a record $30.3 billion in 2023, are set to come under pressure. This is driving a focus on cost-cutting at HSBC and rival banks.
Elhedery must also tackle the conundrum that is created by HSBC’s focus on Asia, particularly China. The bank was founded in Hong Kong in 1865 and the former British colony remains its single biggest market, while mainland China is a big growth area.
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However, this focus on the East has left HSBC stuck in the middle of rising geopolitical tensions in recent years between Beijing on the one hand and the US and the UK on the other.
Ping An, a Chinese insurer that is HSBC’s biggest shareholder, unsuccessfully tried to force Noel Quinn, Elhedery’s predecessor, to formally separate the bank into two companies to relieve these geopolitical pressures on the business but this plan was resisted by the lender’s board.
Elhedery’s revamp does not go this far but he said his overhaul will “drive the future success” of the group.
“I am excited about the opportunities ahead of us and firmly believe that this structure sets us up to deliver the next phase of growth.”
Elhedery was previously HSBC’s finance chief and the group announced on Tuesday that Pam Kaur, its chief risk and compliance officer, had been promoted to take the role he has vacated. It is the first time a woman has filled what is the second highest executive position at HSBC. Jon Bingham, who has been acting as interim finance chief, will resume his role of global financial controller.