HSBC overhauls operations as tensions between China and the West grow

Bankers at HSBC are braced for job losses after its new boss unveiled the biggest overhaul in decades, dividing the sprawling lender’s operations between East and West to cut costs amid mounting geopolitical pressures.
Georges Elhedery, who took charge of the Asia-focused banking group in September, said his internal restructuring of Europe’s biggest lender “will result in a simpler, more dynamic, and agile organisation”.
While Elhedery, 50, did not provide details of any savings, the London-based bank, which employs about 215,000 staff, said the revamp “will reduce the duplication of processes and decision-making that are built into the current structure”. It also revealed Pam Kaur’s elevation to the position of finance chief, filling a role vacated by Elhedery when he was promoted to run HSBC.
The announcement of the shake-up on Tuesday follows weeks of speculation about Elhedery’s plans for HSBC, one of the world’s largest banks overseeing almost $3 trillion of assets.
His overhaul, which takes effect at the start of next year, includes a reorganisation of the group’s main businesses into four divisions: standalone units for Hong Kong and the bulk of its UK operations; another focused on corporate and institutional banking; and a fourth housing the group’s wealth management operations, so-called premier banking services focused on affluent customers outside the UK and Hong Kong, and global private banking.
It also involves the creation of an Eastern markets region that will incorporate its Asia-Pacific and Middle Eastern operations, and a western markets region that will house the non-retail part of its UK operations, as well as its units in Europe and the United States.
It comes at a time when HSBC’s position as a bank that straddles East and West poses an increasingly difficult geopolitical conundrum for its bosses. Falling interest rates are also putting pressure on profits in the banking industry, leading to a renewed focus on costs.
Founded in Hong Kong in 1865, the former British colony remains HSBC’s single biggest market while expansion in mainland China has been an important driver of growth.
Yet this focus on China has left HSBC bosses walking a tightrope as the relationship between Beijing and Washington and London has soured. These strains have been driven partly by China’s decision to impose a draconian national security law on Hong Kong in 2020, which curbed civil liberties. HSBC was criticised by politicians in Britain and America when it endorsed the new law.
The lender’s significant exposure to China drew further scrutiny when Ping An, a Chinese insurer and one of HSBC’s biggest shareholders, began to push for the bank to spin off its Asian business into a separately listed company in 2022. This campaign failed after other investors shunned the idea and Mark Tucker, the HSBC chairman, and Noel Quinn, Elhedery’s predecessor as chief executive, warned it would destroy shareholder value.
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Sources at the bank insisted that the decision to restructure HSBC was not in response to Ping An but was instead aimed at simplifying the group, partly because the western markets region, which will be overseen by Michael Roberts, will bring together the lender’s wholesale businesses.
Roberts will also run the corporate and institutional banking unit. This division will be formed from a merger of HSBC’s investment banking and markets unit with its commercial banking operations outside the UK and Hong Kong. Commercial banking and investment banking have long been run as distinct units within HSBC with separate, duplicate functions such as know-your-customer and credit approval processes and human resources.
Elhedery’s said: “By making these changes, we can better focus on increasing leadership and market share in those businesses, which have clear competitive advantage and the greatest opportunities to grow.”
In a sign of Elhedery’s desire to pare back senior management, the 18-strong executive committee will be replaced by an operating committee of 12. Top bankers who are leaving include Colin Bell, who currently runs its European business, and Stephen Moss, who is responsible for operations in the Middle East, north Africa and Turkey. Greg Guyett, who heads the investment bank, will take a new role overseeing strategic clients.
However, despite the shake-up, shares in HSBC were little changed, closing up 6p, or 0.9 per cent, at 681½p, with City analysts highlighting a dearth of detail, including estimates for restructuring costs. HSBC is due to post third-quarter results next Tuesday, but said further information about the revamp would not come until its full-year results in February.
Analysts at Keefe, Bruyette & Woods, a stockbroker, told clients that a lack of figures meant it was “tough to make any meaningful judgment” about the overhaul. UBS analysts said: “Unknown and important are the magnitude of any required restructuring charges.”
Pam Kaur has made history at HSBC with her elevation to the job of chief financial officer.
She is the first woman since the lender was founded 159 years ago to take the post, which is the second-most important executive position at the bank, and her promotion comes at a pivotal moment.
Georges Elhedery, the HSBC boss who was previously its finance chief, unveiled an ambitious plan on Tuesday to restructure the sprawling lender. Kaur, 60, who is currently HSBC’s chief risk and compliance officer, will play a central role in orchestrating this overhaul.
She has almost four decades of experience, almost entirely in banking, to bring to bear on this task, with Elhedery describing her as the “exceptional candidate” for the post among what was “a strong bench of internal and external” contenders.
Born in India, Kaur studied accountancy at Punjab University, where she also completed an MBA. She joined EY in 1986, where she spent four years as a chartered accountant. She then moved to Citigroup, the American bank where she worked for 15 years, before taking senior jobs at Lloyds Banking Group, NatWest and Deutsche Bank. She arrived at HSBC as its group head of internal audit in 2013 and rose through the ranks to her current post in 2021.
As finance chief, which she will take up at the start of January, Kaur will be paid a base salary of £803,000 a year and will receive an annual fixed pay allowance in shares of almost £1.1 million, as well as an £80,300 per annum pension contribution. She will also be eligible for an annual bonus of as much as 215 per cent of her base pay and annual long-term share awards worth up to 320 per cent.