HSBC overhaul by new CEO stumps employees and investors alike

LONDON – HSBC Holdings’ new chief executive just unveiled the biggest overhaul of the company in at least a decade, but it was missing some key details for employees and investors.

There was, for instance, no sense of how many jobs might be on the chopping block as the lender merged two of its largest businesses and axed some of its longtime regional divisions. Shareholders were also left wondering how much money the bank would even save after it implements the changes.

Some employees found it difficult to understand where they fit within the company’s new organisational structure, according to half a dozen people familiar with the matter. Others felt it was unclear if the bank will still be offering many of its core services in every market.

“These moves seem to make sense,” said Mr Ed Firth, a London-based analyst at Keefe Bruyette & Woods. “However, it remains to be seen whether the restructuring charges or cost savings will be that material to the bank.”

HSBC said it would not be providing further details until it announces full-year results in February. Shares of the company were little changed as investors were left with questions about the financial impact the restructuring would ultimately have.

It all adds to a sense that Mr Georges Elhedery, HSBC’s Lebanon-born and French-educated new boss, is a man in a hurry. In just six weeks, he has already reshuffled his senior management twice, kicked off the sales of businesses in South Africa, Malta and France, and signed a key brand partnership with one of the world’s biggest airlines, while also plotting a corporate overhaul.

“This is how we will fast-forward our plans,” Mr Elhedery said in a statement on Oct 22. “The new structure will result in a simpler, more dynamic and agile organisation.”

‘Better focus’

To be sure, it often takes months to initiate restructurings at companies that are the size of HSBC, which has more than 200,000 employees around the world. Citigroup, for instance, announced similar moves in 2023 – and it is still in the process of shedding 20,000 roles as part of its own revamp.

But Mr Elhedery, 50, who succeeded Mr Noel Quinn as CEO on Sept 2, has repeatedly vowed to cut costs and simplify the structure of his 159-year-old bank. The restructuring has been presented as an answer to persistent investor concerns over how HSBC can survive and thrive in a world of falling interest rates, where increasingly large regional competitors and growing ranks of fintechs keep chipping away at its customer base.

The announced changes include the combination of HSBC’s global commercial and institutional banking operations under Mr Michael Roberts, and the creation of a new international wealth and premier banking business that will be overseen by Mr Barry O’Byrne.

As part of a geographic shake-up, HSBC will have an Eastern regional unit including the Asia-Pacific and the Middle East, and a Western market that includes its non-ring-fenced bank in Britain, Europe and the Americas. Hong Kong and Britain will be standalone units.

In the process, several senior executives have been left by the wayside, shrinking the size of the lender’s top management team, while handing those left more power to run their businesses.

Mr Elhedery held a company-wide call on Oct 22 to address some employee questions about the new structure, but he did not add much information beyond what had been publicly shared by the bank earlier in the day, some of the people familiar with the matter said.

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