On Tuesday, HSBC revealed a restructured geographical configuration and centralized its operations into four distinct business segments during a pivotal transformation that resulted in the appointment of the bank's first female Chief Financial Officer. Despite these announcements, HSBC's stock prices remained stable in the early trading session in London. Over the course of the year, the U.K.-listed shares have seen a more than 6% increase.

As part of the strategic reorganization detailed in regulatory filings with the Hong Kong Stock Exchange, HSBC intends to segment its operations into an "Eastern markets" unit, which will merge the Asia-Pacific and Middle East regions, and a "Western markets" unit, encompassing the non-ring-fenced U.K. operations, the European business, and the Americas. HSBC's largest shareholder, Chinese insurance giant Ping An, which holds a stake of over 9%, has previously advocated for the separation of HSBC's Asian operations from the rest of the group—a proposal that was ultimately not adopted at the bank's annual general meeting last year.

Additionally, HSBC announced its intention to streamline its business processes to "minimize the redundancy of procedures and decision-making processes." Starting from January, the bank will function through four divisions: Hong Kong, U.K., International Wealth and Premier Banking, and Corporate and Institutional Banking. In a statement on Tuesday, Elhedery said, "The new structure will lead to a more streamlined, dynamic, and responsive organization as we concentrate on executing our strategic priorities, which remain constant." Elhedery also noted that this reorganization would propel HSBC into its "next phase of growth."

The bank's newly formed Corporate and Institutional Banking unit will integrate its commercial banking operations outside of Hong Kong and the U.K., its Global Banking and Markets business, and the wholesale banking operations in Western markets. Analysts at UBS commented on the scale of the restructuring required, which they described as "currently unknown but significant." They wrote in a note titled "Simpler, faster, better?" on Tuesday, "Aligning functions across a group with 213,978 employees entails considerable costs, and a divisional shift presents the opportunity for the new CEO to achieve cost reductions."

The analysts also raised important questions about the implications of this new structure, such as where the Australian retail operations fit into the scheme, whether insurance manufacturing is crucial to international wealth, and if HSBC requires a more significant corporate presence in Latin America.

Like many European banks, HSBC has profited from the high-interest-rate environment that followed the Covid-19 pandemic. However, the bank is now facing the withdrawal of that support as the European Central Bank began easing monetary policy in June. In July, HSBC reported a better-than-expected pre-tax profit of $21.56 billion for the first half of the year and announced a share buyback program of up to $3 billion. The bank is scheduled to release its next financial results on October 29.

Earlier this month, the Financial Times reported that Elhedery was targeting the bank's senior management for cost-saving restructuring that could potentially save up to $300 million. As part of the management overhaul announced on Tuesday, HSBC stated that Pam Kaur, currently the group's Chief Risk and Compliance Officer, will take on the role of CFO starting January 1st, succeeding the interim Chief Financial Officer Jon Bingham. This marks the second significant leadership change for HSBC in recent months, following the appointment of former finance chief Georges Elhedery as the group's CEO in July.