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Insider Elhedery is a continuity choice

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CFO replacement to be named in due course

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Outgoing Quinn oversaw raft of asset sales

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HSBC London, Hong Kong shares trade flat after

announcement

(Adds analyst comment and background on Ping An in paragraphs

3-6)

By Lawrence White and Roushni Nair

LONDON, July 17 (Reuters) - HSBC Holdings Plc ( HSBC )

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 ( HSBC ) 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.

"For most investors, continuity is essential, especially

after the battles HSBC's ( HSBC ) board has been through in recent years,

to persuade shareholders that its strategy is right," said Matt

Britzman, equity analyst at Hargreaves Lansdown.

"This appointment helps alleviate any lingering concerns. Of

course, this will come as a blow for those sitting in the other

camp, willing HSBC ( HSBC ) to step back from its non-Asian markets," he

said.

HSBC ( 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 ( 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 ( HSBC ) in 2005. He led HSBC's ( HSBC ) Middle

Eastern, North Africa and Turkiye region between July 2016 and

February 2019.

After that, he was the co-head of the Global Banking and

Markets business, the division that houses HSBC's ( HSBC ) trading and

investment banking advisory businesses, and accounted for 24% of

the group's revenues last year.

In October 2022, he was unexpectedly appointed CFO, just

weeks after returning from a sabbatical - a move that groomed

him for the top job.

"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 ( 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 the push by rebel investors to break up the bank,

guiding the lender to record profit.

The appointment comes at a time when HSBC ( HSBC ), Europe's

largest lender with assets 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 ( HSBC ) has shrunk its

global footprint by around a quarter, exiting low-growth markets

to plough capital and resources into Asia, which accounts for

the 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 ( 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 ( HSBC ) 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 ( 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 ( 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 ( HSBC ) will report its interim results on July 31.

The lender's shares in London and Hong Kong were trading

mostly flat after the announcement. HSBC's ( HSBC ) shares have risen 7%

this year, against an 18% gain in the STOXX Europe banks index

.