HSBC chief pledges to be ‘ruthless’ in elevating bank to top 5 status

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HSBC’s chief executive Georges Elhedery has said he would be “ruthless” in overhauling Europe’s largest lender, insisting that it was “not an option” for the bank to fail to become a top five player in the areas where it chose to compete.

Speaking at the Financial Times Global Banking Summit on Tuesday, Elhedery said his decision to shut key parts of HSBC’s investment banking business in the UK, Europe and the Americas had been “difficult” but necessary.

“Some decisions are unpopular, but then I wasn’t appointed in this role to be popular,” he said. “You have to take some difficult decisions . . . We have to be ruthless. We need to be the best at what we do.”

The comments came after HSBC committed in January to closing its mergers and acquisitions advisory and its equity capital markets businesses outside Asia and the Middle East.

“We are moving at pace in the spirit of simplification and focusing on our strengths,” Elhedery said of his restructuring on Tuesday. “Those few areas where we are visibly not [in the top 20], we have to take ruthless decisions and say we shouldn’t be doing that.”

Since becoming chief executive in September last year, Elhedery has embarked on a wide-ranging restructuring of the UK-based bank.

The changes have included redrawing HSBC’s operations into “eastern” and “western” units — which were later renamed internally as “Asia and the Middle East” and “Europe and Americas” — closing key parts of its investment banking business and merging two of its three main units. In the process, it has cut an expensive layer of senior bankers.

On Tuesday, Elhedery pledged to “double down” on its mergers and acquisitions and equity capital markets businesses in the Middle East and Asia.

“We believe we can be the best [in that market]. We’re not today in the top five, but we can see a path to becoming a top five [player]. In time, not becoming top five [in the market] is not an option.”

HSBC’s board is also under pressure to name a permanent chair to succeed Sir Mark Tucker who stepped down earlier this year.

Following a protracted recruitment drive, former UK chancellor George Osborne and Goldman Sachs executive Kevin Sneader are seen as the frontrunners to replace Tucker.

Elhedery said that the main role of a non-executive chair was to “challenge” him.

Elhedery added that while HSBC’s interim chair Brendan Nelson had decided he did not want to serve for a full term of six to nine years, he would stay in the role “for as long as it takes until the board and the nomination committee identify the right chair”.