HSBC overhaul to divide businesses along east-west lines

Good morning. In today’s news:

• EY fires dozens of US staff

• Who would run Kamala Harris’s economy?

• The new low-cost, high-energy weapons that defence companies are developing

But first, new HSBC chief executive Georges Elhedery has unveiled a sweeping new plan that will see the Asia-focused bank divided into businesses serving “eastern” and “western” geographical regions.

In his first big announcement as chief executive, Elhedery said the changes would make it “easier” to serve customers and “drive the future success of the group”. It follows a campaign last year by Chinese insurer Ping An, one of HSBC’s biggest shareholders, to push for a separation of the bank’s Asian operations and comes as tensions between the US and China continue to rise.

HSBC said the changes would come into effect on January 1 but did not say whether it would start cutting jobs. The Financial Times previously reported that Elhedery was planning a $300mn cost-cutting drive that would target senior bankers. Read more on the proposed changes.

Here’s what else I’m keeping tabs on today:

• Economic data: The IMF publishes its latest World Economic Outlook and its global financial stability report.

• Brics summit: Leaders of the group gather in Kazan, south-west Russia. Narendra Modi and Xi Jinping are set to attend after India yesterday said a deal was reached with China on patrols at their disputed border.

• Companies: General Motors, GE Aerospace, Kimberly-Clark, Lockheed Martin, Moody’s and Philip Morris International are among those reporting results. Full list in our Week Ahead newsletter.

• Election: Donald Trump will hold a rally in Greensboro, North Carolina, as the US election nears and the former president gains on vice-president Kamala Harris in the polls.

• Israel-Gaza war: US secretary of state Antony Blinken arrives in Israel to revive stalled Gaza ceasefire talks.

Five more top stories

1. Exclusive: EY has fired dozens of US staff for what it called cheating on professional training courses. The dismissals took place last week after an investigation found that some employees had attended more than one online training class at a time during the “EY Ignite Learning Week” in May. Several of the fired employees told the FT they did not believe they were violating EY policy.

2. The top US consumer finance watchdog has finalised long-awaited “open banking” rules that it hopes will inject more competition into a market with more than 4,000 lenders and make it easier for customers to link their bank accounts to newer apps. The new rules will bring the US more in line with the UK and Europe. Here’s more on the changes.

3. Iran’s currency and stocks have declined and most foreign airlines have suspended flights in anticipation of an Israeli retaliatory attack on the Islamic republic. While regime loyalists insist that Tehran is not afraid of a potential war with Israel, many fear that the country’s sanctions-hit economy can ill-afford another cycle of escalation.

4. Share buybacks on mainland China’s biggest exchanges have soared to a record high of Rmb235bn ($33bn) so far this year, more than double last year’s total and far surpassing the previous record of Rmb133bn in 2022. The rush comes amid policymakers’ attempts to revive a flagging stock market.

• Beijing’s U-turn: After resisting calls for fiscal stimulus for years, today’s Big Read explores why Xi Jinping changed his mind — and whether it will be enough.

5. US drinkers are continuing to cut back on their vodka, whisky and tequila intake in a sign that, despite the improved economic environment, consumers are finding higher prices hard to swallow. The volume of spirits sold in the US in the first seven months of the year shrank 3 per cent compared with the same period last year, according to drinks data provider IWSR. Analysts are now asking whether the shift is structural or cyclical.

Today’s big read

Kamala Harris is set to overhaul the US administration’s top economic team if she wins the presidency. The vice-president will have to quickly decide what changes she wants to make to the top economic positions, drawing from current and former officials in Joe Biden’s administration as well as the private sector. Here are the frontrunners for Treasury secretary and other key posts.

We’re also reading . . . 

• US election: Strongman leaders around the world would welcome a victory for the Republican former president, writes Gideon Rachman.

• AI: Leading artificial intelligence companies are racing to develop the cutting-edge technology and infuse their chatbots with personality.

• Moldova’s EU bid: Here’s how Russia won over the former Soviet country’s south to deliver an unexpected upset for President Maia Sandu’s referendum to join the bloc.

• Victims of success: While challenging, the prevalence of today’s mental and physical conditions may actually be a good sign for the human race, writes Stephen Bush.

Graphic of the day

Long regarded as more science fiction than reality, low-cost, high-energy laser weapons are getting renewed attention from the defence sector, as militaries around the world look to the cutting-edge technology as one of the ways to counter cheap new missile threats such as drones.

Take a break from the news

Patriot, the memoir of Vladimir Putin’s murdered opponent Alexei Navalny, is a worthy testament to his courage, defiance and humour, writes FT Moscow bureau chief Max Seddon.

Additional contributions from Tee Zhuo and Benjamin Wilhelm