HSBC Overhaul Sparks Renewed Debate on Break-Up

HSBC chief executive Georges Elhedery’s proposed restructuring of the bank has reignited discussions about a potential break-up of the group. One top-20 investor has suggested the bank consider a complete split between its eastern and western operations.

Rajiv Jain, founder of GQG Partners—which holds an $800mn stake in HSBC—said the bank’s long-term direction “should really be an eventual break-up.” This idea, previously championed by top shareholder Ping An, was rejected by shareholders in a vote last year.

In an interview with the Financial Times, Jain remarked, “HSBC may have lost its way trying to be everything, competing with large US bulge-bracket banks—a challenge that has plagued many Swiss and UK banks. Straddling two horses heading in different directions is very hard to sustain in the long term.”

HSBC, headquartered in London but deriving most of its profits from Asia, announced on Tuesday a shift to a “simpler” structure. The bank will move from three divisions and five geographic regions to four divisions and two regions.

Under Elhedery’s plan, Hong Kong and the UK will operate as standalone units. The other two divisions—corporate and institutional banking, and international wealth and premier banking—will focus on “eastern” and “western” markets.

Recent years have seen HSBC sell or plan to sell several businesses in what is now its “western markets” division, including operations in Canada, Greece, US retail banking, and Argentina. This restructuring aims to streamline management in the west, reflecting the reduced scale of operations there.

A source noted that the Middle East was included in the “eastern markets” category to leverage its growing ties with China, India, and Southeast Asia.

For decades, HSBC has navigated a delicate balance between the demands of western regulators and Chinese and Hong Kong authorities. However, escalating geopolitical tensions between China and the West have raised concerns about potential sanctions on Chinese banks. Such a scenario would have profound implications for the global economy and HSBC, given its unique positioning across both regions.

Despite efforts to adapt, HSBC remains caught between two worlds.