British banking giant HSBC on Wednesday named chief financial officer Georges Elhedery as the bank's next chief executive to drive "the next phase of development and growth" following the surprise announcement of the departure of the current CEO earlier this year.

The new boss will take the helm on Sept. 2, the bank said, as it looks to push on with a transformation undertaken by current CEO Noel Quinn, who announced his shock retirement in April.

"I am delighted to confirm Georges as the next HSBC Group chief executive," group chairperson Mark Tucker said in a filing to Hong Kong's stock exchange.

"The Board concluded that Georges was the outstanding candidate and we look forward to working together as he leads HSBC through the next phase of development and growth."

Elhedery, 50, joined HSBC in 2005 and previously held the role of Co-CEO of Global Banking and Markets before being appointed chief financial officer in January 2023.

The Lebanon-born, French-educated banker also led the bank's Middle Eastern, North Africa and Türkiye region from July 2016 to February 2019.

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 has a "track record of leading through change, driving growth, delivering simplification, containing costs and brings a strong focus on execution," Tucker said.

Elhedery said he was "deeply honored by the trust placed in me to lead this great institution into the future."

"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 filing.

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."

"It's a continuity appointment, but a strong candidate and I think will be taken well today," he said.

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% of HSBC according to LSEG data, declined to comment on Elhedery's appointment.

HSBC said it will announce the next chief financial officer in due course.

Quinn will work with Elhedery to ensure a "smooth and orderly" handover before stepping down, the bank added.

Quinn, 62, oversaw a transformation of the London-headquartered lender and saw record profits during almost five years in charge.

Under him, the firm has accelerated a yearslong pivot to Asia – where it generates most of its revenue – vowing to develop its wealth business and target fast-growing markets.

The bank has concluded the sales of its Canadian operations and its retail bank operations in France. It will also sell its Argentina division.

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.

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 interim results on July 31.

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