HSBC’s Mideast operations will report in to Asia as bank launches ambitious restructuring

HSBC’s Middle East operations will be paired up with Asia Pacific as Europe’s biggest lender kicks off its first major restructuring in a more than a decade under new CEO Georges Elhedery, who took the helm in September. The bank announced the restructuring in a disclosure to the London Stock Exchange (pdf) early yesterday morning, saying all the changes go into effect 1 January 2025.

What’s happening in our region? What HSBC presently calls the MENAT (Middle East, North Africa, Turkey) region will now be part of an “Eastern Markets” unit along with the former Asia-Pacific region, reporting in to David Liao (and HSBC veteran and member of Hong Kong’s elite) and Surendra Rosha. HSBC Middle East CEO Stephen Moss will leave the bank, as will Europe chief Colin Bell.

Other changes at HSBC: It will create a new “wholesale” or corporate and investment banking group by merging its commercial banking business with its global banking and markets team and its other Western markets. It’s also doubling down on international wealth and premier banking, particularly in the Middle East and Asia.

The result: A streamlined structured and fewer people sitting around the exco table as HSBC looks to grow in the West while capturing the globally critical corridor between Asia and the Middle East. From 1 January, HSBC will have four businesses: Hong Kong, the UK, corporate and institutional banking, and international wealth and premier banking. It will also have its first woman CFO (Elhedery’s last post before becoming CEO) and will downsize and rebrand its top executive committee, which contracts to 12 members from 18 and will now be called the “group ’’operating committee.”

Why does it matter here? HSBC is an influential player in MENA with a substantial footprint. It banks large regional corporates, multinationals, and the affluent through commercial banking operations across Egypt and the UAE and through SAB in Saudi Arabia. It’s also a sought-after advisor and arranger of capital and debt raisings across the region:

• It recently quarterbacked Arabian Mills’ Tadawul IPO and is working now on the IPOs of LuLu Retail (ADX) and UIHC (Tadawul);
• It provides or arranges debt and equity for regional banks (most recently joining a sustainability-linked facility for Al Rajhi and an AT1 capital raise for Dubai Islamic Bank);
• It is advising on everything from privatization sales in Egypt to KAFD’s ambitions to raise USD 750 mn to fuel its growth as the latter mounts a challenge to DIFC.

Why is it happening? Elhedery (bio) is a regional veteran who was previously based in Dubai as regional head of global markets and later as CEO for the MENAT region. He took over in September from CEO Noel Quinn and is now reshaping an institution that some argue has become too organizationally complex. Quinn and others on his team were against the move to a wholesale banking model (with corporate and investment banking under one division), which has been debated inside HSBC off-and-on for some time.

COVERAGE- The news leads the front pages of the financial press this morning: Financial Times | Reuters | Bloomberg | New York Times DealBook.

MARKETS THIS MORNING-

The Nikkei is flat this morning despite Tokyo Metro shares gaining 45% in their market debut — it’s Japan’s biggest IPO in six years, raising the equivalent of USD 2.3 bn. The Hang Seng, Shanghai Composite, and ASX 200 were up slightly as traders digested signals that Wall Street’s rally may have stalled.

The opening bell: Equities futures suggest you can expect major in Europe as well as on Wall Street and Bay Street to come under moderate selling pressure when Western markets open later this morning.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.4% yesterday on turnover of SAR 5.5 bn. The index is down 0.1% YTD.

In the green: Chemanol (+7.8%), Al Baha (+7.4%) and Sisco Holding (+6.1%).

In the red: DWF (-4.9%), Al Majed Oud (-3.3%) and Al Arabia (-3.2%).

THE CLOSING BELL: NOMU-

The NomuC fell 1.2% yesterday on turnover of SAR 64 mn. The index is up 7.7% YTD.

In the green: Naas Petrol (+7.7%), Quara (+5.9%) and Al Mohafaza for Education (+5.1%).

In the red: Sama Water (-11.7%), Molan (-6.5%) and Aqaseem (-6.1%)