HSBC leaves door open for bigger cost cuts, Asia focus as revamp spurs leadership shake-up

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Colin Bell, who oversees Europe, and Stephen Moss, who leads the Middle East and North Africa region, will depart on December 31

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Mia Castagnone

Published: 5:00pm, 23 Oct 2024Updated: 8:24pm, 23 Oct 2024

Corrected [8:24pm, 23 Oct, 2024]

[8:24pm, 23 Oct, 2024]
Corrects HSBC's London stock price in the third paragraph.

HSBC is leaving no doubts to analysts about its internal reorganisation: the biggest lender in Europe will look to cut costs by flattening its structure and shifting more of its capital and focus to earn more from its single biggest profit centre in Hong Kong.

That much is evident as regional CEOs overseeing Europe, the Middle East and North Africa are set to depart on December 31 in the first shake-up initiated by Georges Elhedery since he took over the top post from Noel Quinn on September 2. There will be some redundancies, he said on Tuesday.

That is music to investors’ears. The shares have risen 0.4 per cent to HK$68.80 in Hong Kong since the announcement; in London, they have advanced 1.1 per cent to £6.8.

The shake-up could be a sign of cutting layers of “unproductive reporting lines to save costs,” Gurpreet Singh Sahi and Wing Huang, analysts at Goldman Sachs, said in a report on October 22. It is likely to allow the group to channel future investment and capital towards businesses or areas with higher returns, it added.

In particular, the productive wealth management business is likely to warrant more investments in resources to pump up growth, analysts said.

CEO Georges Elhedery is wielding the axe to trim costs, less than two months into the top job. Photo: Handout

The newly formed corporate and investment banking (CIB) unit has the biggest scope for more efficiency improvements and balance sheet changes, Goldman added, given its weakest income-to-risk-weighted capital at the interim stage this year.