Analysis: HSBC management in question after Elhedery’s sprint as CEO


LONDON/SINGAPORE, Oct 25 (Reuters) – Georges Elhedery’s appointment as HSBC’s chief financial officer caps a journey that has taken him from war-torn Lebanon to favorite for the top job at Europe’s biggest bank. ‘Europe. It also surprised investors and raised questions about HSBC’s direction.

Known at HSBC (HSBA.L) for his strategic vision more than his accounting skills, Elhedery has risen through the ranks of HSBC’s investment banking since joining in 2005. With his latest promotion, the 48-year-old is only one step away from the leading role.

“It was a surprise for us,” said Hugh Young, president for Asia of Aberdeen Standard Investments, one of HSBC’s top 25 shareholders. CEO Noel Quinn has done a good job, but investors are eager for faster progress, Young said.

Elhedery’s move to chief financial officer comes at a difficult time for HSBC. Since Quinn officially took over as CEO in March 2020, HSBC shares have fallen almost 10% and the company has been caught up in political tensions between the West and China.

The bank is under pressure from its biggest investor, Ping An, to explore options, including listing its Asian business, a move HSBC rejected.

The bank’s performance does not help.

HSBC’s profits fell 42% in the third quarter as bad debts rose amid a darkening global economic outlook.

The bank also alarmed investors by cutting its net interest income forecast for 2023 despite a favorable interest rate environment, sending its shares down nearly 7% on Tuesday.

HSBC declined to comment for this article, as did Elhedery through an HSBC spokesperson.

Quinn earlier told Reuters: ‘There is no change in strategy as a result of these leadership changes. He said the London-based bank had the estate in mind.

Under chief financial officer Ewen Stevenson, HSBC attempted to improve profitability by getting out of business and cutting costs, a task at which some have questioned whether Elhedery would be the most adept.

A person familiar with Elhedery said he was a skilled trader, but may not have the accounting expertise typically associated with the CFO role. Elhedery’s strengths were much more in strategy and people management, another source said.

Analysts also expressed surprise at the exit of Stevenson, seen as a safe pair of hands who had steered the bank through a period of restructuring as it tried to cut costs and scale back its global business.

“It is very disappointing to hear that Ewen is stepping down, he has had a transformational impact on HSBC’s cost discipline, bringing much needed credibility to its financial targets and execution,” said Investec analyst Ian Gordon. .

CIVIL WAR

Born in Beirut during Lebanon’s civil war that divided its capital into the Christian East and the Muslim West, Elhedery grew up with a banker father and a teacher mother, based on earlier interviews he has given.

Elhedery moved to Paris to study engineering at École Polytechnique and earned a postgraduate degree in statistics and economics.

He began his banking career as a rates trader, joined HSBC in 2005 in the Global Banking and Markets division, and rose through the ranks.

In 2016, he assumed leadership of the Middle East, North Africa and Turkey region, managing 10,000 people across all banking businesses and overseeing risk, financial crime, compliance and capital management.

In 2020, he became co-head of Global Banking and Markets, the division that brings together HSBC’s trading and investment banking advisory activities, succeeding his fellow banker of Lebanese origin and trained in Paris. , Samir Assaf.

He surprised his colleagues at HSBC this year by announcing a sabbatical, characterized at the time as a break to spend time with family and recharge.

It came as executives moved to Hong Kong, part of a wave of relocations by HSBC of senior positions to the bank’s biggest market.

His co-head of investment banking Greg Guyett was left solely in charge of the business. Upon his return in September, Elhedery said he would focus on projects with CEO Quinn.

A regular feature of the bank’s diversity and inclusion events, according to one person, Elhedery was seen to be as interested in the needs of junior employees as they were in senior ranks.

He runs 10 kilometers before work every day, according to one of his former employees. That says a lot about the kind of man he is, the banker told Reuters.

Reporting by Lawrence White, Sinead Cruise and Anshuman Daga, additional reporting by Pamela Barbaglia. Editing by Jane Merriman

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