HSBC sticks to tradition in appointing Elhedery as CEO

HSBC has appointed its Chief Financial Officer Georges Elhedery as its next CEO, opting for continuity as it tries to kickstart growth.

Elhedery, 50, who becomes HSBC's third chief executive in less than eight years, will replace outgoing head Noel Quinn from September 2. While the 160-year-old lender did consider external candidates, it has traditionally appointed its CEO from within.

"For most investors, continuity is essential, especially after the battles HSBC's board has been through in recent years, to persuade shareholders that its strategy is right," said Matt Britzman, equity analyst at Hargreaves Lansdown.

Elhedery's appointment comes as the bank tries to shift from restructuring to growth, at a time when helpful interest rate hikes may have peaked and geopolitical tensions simmer.

Iain Pyle, senior investment director at HSBC shareholder abrdn, said Elhedery had made a good impression on the market over his 18 months as finance chief and was "a clear communicator."

HSBC defeated a resolution last year backed by Chinese insurance giant Ping An and other Hong Kong-based shareholders who were seeking a spin-off of its lucrative Asia business.

Ping An, which owns 8.9 percent of HSBC according to LSEG data, declined to comment on Elhedery's appointment.

Lebanon-born Elhedery began his career in banking as a rates trader before joining HSBC in 2005. He led HSBC's Middle Eastern, North Africa and Turkey region between July 2016 and February 2019. After that, he was the co-head of the Global Banking and Markets business and accounted for 24 percent of the group's revenues last year.

In October 2022, he was unexpectedly appointed CFO, just weeks after returning from a sabbatical.

"Working together with our talented team, I look forward to delivering exceptional value to our clients and investors by driving strong performance on a sustainable growth trajectory," he said.

Stanley Tsai, founder of investment advisory firm Antler Capital, said he was not surprised by the choice.

"Some investors might've wanted someone with more direct Asia experience, especially with the Greater China portfolio, but it's always been the non-Asia business that has presented the most overwhelming challenges," he said.

That said, HSBC is highly sensitive to souring relations between China and the West and delivering on growth ambitions in Asia will be challenging.

Elhedery will also have to manage HSBC's exposure to China's lingering bad loans crisis, which triggered a shock US$3 billion (HK$23.42 billion) impairment charge last February on the bank's stake in Bank of Communications.

He has relatively little direct work experience in Asia, but did learn Mandarin during his six-month sabbatical, sources said.

REUTERS