HSBC has announced a significant restructuring of its operations, dividing the bank into eastern and western markets in a bid to cut costs and navigate increasing geopolitical tensions.

The changes, set to take effect from January 2025, will see the bank simplified into four key units: UK, Hong Kong, corporate and institutional banking, and international wealth and premier banking. The bank's commercial and institutional banking divisions will be merged.

HSBC's new chief executive, Georges Elhedery, stated that the changes aim to "unleash our full potential and drive success into the future." He added, "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."

The bank's operations will be split geographically into "eastern markets," covering Asia-Pacific and the Middle East, and "western markets," covering the UK, continental Europe, and the Americas.

The restructuring also includes senior management changes, with Pam Kaur appointed as HSBC's first female chief financial officer. Kaur, previously the bank's chief risk and compliance officer, will also take up the role of executive director of the board, subject to election at the firm's next annual general meeting.

Kaur, a 60-year-old Indian-born veteran of the banking industry, brings extensive experience from her previous roles at Deutsche Bank, Citi, Lloyds Banking Group, and Royal Bank of Scotland. She is known for promoting the "Power of Chi" management framework, emphasising courage and confidence in leadership.

As chief financial officer, Kaur is expected to maintain a relatively low public profile, allowing Elhedery to focus on client-facing activities. However, sources suggest she will bring her expertise to bear on HSBC's future direction and strategy.

Kaur's appointment is seen as a significant milestone in breaking down the gender gap in the banking industry. She joins a small group of women in top global banking roles, including Citi boss Jane Fraser and Morgan Stanley finance chief Sharon Yeshaya.

HSBC's gender pay gap, at 43.2 per cent in 2023, is one of the widest in the industry, and Kaur is likely to push for increased momentum in narrowing this gap. As a global sponsor of HSBC's Embrace employee network, Kaur has described herself as a "passionate supporter of diversity and inclusion."

Elhedery's restructuring plan may signal preparations for heightened tensions between the US and China, particularly with the upcoming US election. However, some analysts argue that the overhaul does not entirely address the bank's challenges.

As part of the restructuring, HSBC will reduce its executive committee from 18 members to 12, renaming it the Group Operating Committee. Other senior management changes include Greg Guyett becoming chair of the Strategic Clients Group, and the departure of Europe head Colin Bell and Middle East head Stephen Moss.

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