HSBC picks insider as new CEO

HSBC Holdings Plc named Georges Elhedery its next chief executive officer, continuing the lender’s tradition of picking insiders to run the bank.

Elhedery will take over as CEO from Sept. 2, the London-headquartered bank said in a statement on Wednesday. He replaces Noel Quinn, who in April announced his surprise decision to retire from HSBC after a more than three-decade career, including five years as CEO.

The 50-year-old takes the role less than two years after his promotion to chief financial officer. Before that, the Lebanon-born, French-educated banker had a six-month sabbatical that included spending some of his time learning Mandarin.

While the appointment “brings continuity, it does not bring the sort of fresh insight that an external appointment might,” Gary Greenwood, an analyst at Shore Capital, said in a note to clients. 

The HSBC CEO role is one of the biggest seats in global finance given the worldwide span of the bank’s business, which incorporates hubs in the UK and Hong Kong, as well as major operations in several other countries including the US, China and Saudi Arabia.

Elhedery said in the statement he was “honored” to lead the lender.  

The appointment comes after an “orderly and robust succession process” led by Chairman Mark Tucker and the nomination and corporate governance committee with the support of a search firm. The process considered both internal and external candidates, while Elhedery and Nuno Matos, head of wealth and personal banking, were viewed as the leading replacements for Quinn. 

Shares of HSBC were little changed at 8:36 a.m. in London. The lender’s stock has climbed 4.5% so far this year.

What Bloomberg Intelligence Says: 

The unexpected resignation of CEO Noel Quinn follows a period of streamlining operations, with the focus of successor Georges Elhedery now likely to shift to bolstering Asia growth and noninterest-income capacity. Further cost control looks inevitable to sustain positive operating jaws (revenue less cost growth) and a midteens return on tangible equity beyond 2024.

— Tomasz Noetzel, BI banking analyst

Under Quinn, the bank pivoted toward Asia, and in particular China while selling off businesses in America and Europe. Elhedery will need to navigate political tension between the US and China, as well as a fragile political and economic environment in Hong Kong, the bank’s biggest single market.

“One question for Elhedery is where he will stand on the question of HSBC’s geographical footprint and on whether divestitures of additional geographies should be actively pursued,” Michael Makdad, a senior equity analyst at Morningstar Inc. 

Previously, Elhedery was co-head of HSBC’s investment banking arm, and spent nearly a decade in the Gulf where he worked in various roles before running the bank’s Middle Eastern business. 

He will continue in the CFO role during the transition period and an announcement on his successor will be made in “due course,” HSBC said.

Elhedery’s remuneration as chief executive will consist of a base salary of £1.38 million ($1.8 million), a fixed pay allowance of £1.7 million and a pension allowance of £137,600. He’s eligible to be considered for discretionary variable pay that consists of an annual incentive award up to a maximum value of 215% of base salary, and a long-term incentive award as much as 320% of his base.