HSBC hones in on wealth business as it unveils new international structure

HSBC said today (22 October) it is merging its commercial and institutional banking operations and creating a new international wealth and premier banking division.

The UK headquartered global group said it was also simplifying its geographic structure with the creation of Eastern markets and Western markets divisions , while also appointing Pam Kaur as its new chief financial officer.

HSBC Group Chief Executive Officer, Georges Elhedery said: “The changes that we are announcing today will make it easier for our colleagues to serve our customers and drive the future success of the Group. The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged.

“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. Our home markets of the UK and Hong Kong, together with our corporate and institutional banking as well as our wealth and Premier banking businesses, are the core strengths of HSBC.

“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. This is how we will fast forward our plans to execute our strategy, unleash the full potential of the bank and ensure our talented colleagues can thrive, and deliver best in class products and service excellence, for our customers. When our customers succeed, so do we."

From 1 January 2025, HSBC said it will operate through four businesses with clear lines of
responsibility:
1. Hong Kong
2. UK
3. Corporate and Institutional Banking
4. International Wealth and Premier Banking

The changes, it said, "will reduce the duplication of processes and decision making that are built into the current structure and will result in greater alignment and agility in serving our customers. The Group’s functions will be realigned to support the four new businesses".

In reaction, Susannah Streeter, head of money and markets, Hargreaves Lansdown said: ’The new CEO Georges Elhedery has moved swiftly to put his own corporate stamp on HSBC, with a restructuring drive which focuses on elevating the growth levers in the business. Second quarter revenues got a significant boost from the fees generated in its wealth business, so creating a new division to focus on high and ultra net worth accounts is aimed at capitalising on further potential that this area of the business promises.

"HSBC is long been on an Asian pivot, but it’s not gone far enough for a section of the investor base, who have wanted to see the business spin out its Asian operations. This has been repeatedly rebuffed, and with Mr Eldhedery maintaining that the bank’s strategic priorities remain unchanged, splitting its operations into Eastern markets and Western markets division does not seem to indicate that a hiving off is on the cards.

"Instead, cost-cutting is a big driver of these changes, with fresh efficiencies likely through the simplification of its geographical structures and the merger of its commercial and institutional banking operations. Pam Kaur is likely to be seen as a safe pair of hands as the new Group CFO, given she’s been at the bank for more than a decade in numerous financial leadership roles.

"Shareholder reaction to these moves has been muted, with a shift in focus on wealth management largely expected, and the restructure of the senior management team not ruffling any feathers. Given the bank’s big Asia focus, China’s economy is still a concern. There are ongoing challenges in in the Chinese commercial real estate market, and although management has indicated the worst has come and gone, concerns are still lingering about how far the planned stimulus form authorities will really move the dial on sentiment.’’