HSBC Kicks Off Biggest Restructuring In A Decade Under New CEO

(Bloomberg) -- HSBC Holdings Plc unveiled a broad restructuring across different business lines and geographies as newly appointed Chief Executive Officer Georges Elhedery embarks on an ambitious effort to cut costs at the banking behemoth.

The lender will combine its global commercial and institutional banking operations under Michael Roberts and it’s creating a new international wealth and premier banking business that will be overseen by Barry O’Byrne. It’s also revamping its regional operations around the world.

Taken together, the changes mean HSBC is embarking on its biggest restructuring in at least a decade. They’re the latest sign that Elhedery has been under pressure to trim costs in order to protect the firm’s margins as central banks around the world begin to cut interest rates.

“The new structure will result in a simpler, more dynamic, and agile organization as we focus on executing against our strategic priorities, which remain unchanged,” Elhedery said in a statement.

The changes will cut the the number of executives who sit on the newly named key operating committee to 12 from 18.

HSBC also named Pam Kaur chief financial officer, making her the first female finance director in its 159-year history. She joined in 2013 as audit head before overseeing risk and compliance.

“She is highly respected and well known to the board and was the unanimous choice,” Chairman Mark Tucker said in a statement.

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

Some key executives are leaving as part of the reshuffle. They include Stephen Moss, who runs Middle East and North Africa, along with Colin Bell, who led operations across Europe. Greg Guyett, the current CEO of global banking and markets, was named chair of the strategic clients group, a newly created role.

With some of the changes, HSBC is turning to a playbook recently used by rival Citigroup Inc.

Last year, the New York-based company eliminated the roles held by three regional chiefs who oversaw operations in about 160 countries around the world along with legions of managers with that same geographic focus. Those changes are part of what’s allowing the firm to cut more than 20,000 jobs across the company.

HSBC will likely incur restructuring charges as it implements some of the changes, according to Ed Firth, an analyst at Keefe Bruyette & Woods. He expects more details on those charges — which he estimated could be between $100 million to “low billions” — when the firm presents its full-year results in February.