In a significant reorganization led by its new CEO, HSBC announced on Tuesday that it would merge some of its commercial and investment banking businesses in an effort to reduce expenses and increase profits.
In a statement to employees, CEO Georges Elhedery stated that a new leadership structure will “unleash our full potential and drive success into the future.” This structure includes the hiring of Pam Kaur as the lender’s first female CFO.
Four business lines comprise the group’s operations: wealth banking, corporate and institutional banking, Hong Kong, and the UK.
Elhedery is tackling one of HSBC’s most difficult issues as part of the makeover.
Its commercial bank, which provides services to over 1.2 million business clients, ranging from start-ups to large businesses, has long had the ability to increase profits by encouraging those clients to purchase additional goods.
Elhedery hopes to foster closer collaboration and fulfill HSBC’s recently announced public focus on cross-selling more products to customers with an international focus by merging that unit with the investment banking division, with the exception of Hong Kong and the UK, into the new corporate and institutional division.
When HSBC (HSBC) releases its third-quarter results on October 29, further information may become available. The bank did not specify how many positions will be impacted or what the estimated cost reductions may be.
As it concentrates on Asia and areas where it has scale, HSBC, which employs roughly 214,000 people worldwide, has been cutting back on companies in Western markets, including the US, France, and Canada, and eliminating redundant posts for years.
According to RBC Capital Markets analyst Ben Toms, “today’s announcement is just shifting around different parts of the group, with no change to the big picture.”
“Given that the bank is looking to reduce expenses to counteract topline pressure, the real question that the market is anticipating is which members of that group might be next on the chopping block and how much this restructuring will cost the bank.”
HSBC has announced a number of senior management changes in addition to the structural reform.
Kaur, 60, was the top risk and compliance officer at HSBC before taking over as CFO. In April 2013, she became the group head of internal audit at the bank.
According to an internal memo, the lender’s Middle East head Stephen Moss and Europe head Colin Bell, who was originally considered for the CEO position, are departing the company.