HSBC Holdings Plc has appointed its Chief Financial Officer Georges Elhedery as its next CEO, the bank said on Wednesday, a choice that highlights the global lender's preference for continuity as it looks to kickstart growth.

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

Since 2020, Elhedery has been the co-head of the Global Banking and Markets business, the division that houses HSBC's trading and investment banking advisory businesses, and accounted for 24% of the group's revenues last year.

Lebanon-born Elhedery, who began his career in banking as a rates trader before joining HSBC in 2005, was named the surprise successor to Ewen Stevenson as CFO in October 2022, just weeks after returning from a sabbatical.

He also led HSBC's Middle Eastern, North Africa and Turkiye region as the CEO of that division between July 2016 and February 2019.

"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 in the bank's statement announcing his appointment.

Quinn, who led HSBC for five years, will remain CEO until Elhedery starts in the role. At the time of his surprise exit announcement in April, he had said he wanted a better work-life balance and planned to pursue a portfolio career.

Quinn oversaw a raft of asset sales, navigated a global pandemic and a push by rebel investors to break up the 160-year bank, and guided the lender to record profit.

The move comes at a time when HSBC, Europe's largest lender by assets with a balance sheet of $3 trillion and in relatively strong financial health, is betting on its historic Asian ties to ramp up profit.

Since the financial crisis of 2008, HSBC has shrunk its global footprint by around a quarter, exiting low-growth markets to plough capital and resources into Asia, which accounts for bulk of its revenues and profits.

CHALLENGES AHEAD

Stanley Tsai, founder of Hong Kong-based investment advisory firm Antler Capital, said he wasn't 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 at a time when China's economic growth is slowing and the bank risks being embroiled in geopolitical tensions.

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

He has relatively little direct work experience in Asia, having spent the bulk of his HSBC career in roles across its Middle East and Africa businesses, but did learn Mandarin during his six-month sabbatical, according to sources at the bank and media reports.

HSBC said it will announce Elhedery's successor as Group CFO in due course. Ahead of the announcement, the bank was exploring financial incentives and reallocating key projects to retain those who miss out on the top job, two people with knowledge of the discussions told Reuters.

HSBC will report its annual results on July 31.

The lender's shares in Hong Kong were trading mostly flat after the announcement. HSBC's shares have risen 7% this year, against an 18% gain in the STOXX Europe banks index.