The London-headquartered business will be split into four distinct parts: Hong Kong, UK, Corporate and Institutional Banking plus International Wealth and Premier Banking.
HSBC added in a statement that is was also simplifying the bank's geographical organisation, bringing together the Asia-Pacific and Middle East regions, while bringing the European and US operations under one roof.
"By making these changes, we can better focus on increasing leadership and market share in those businesses which have clear competitive advantage and the greatest opportunities to grow," Elhedery said in the statement.
HSBC added that chief risk officer Pam Kaur would become its chief financial officer from January 1.
She replaces Elhedery, who took over from Noel Quinn as CEO in September.
Quinn had pivoted the bank heavily towards Asia during his stewardship of the bank, whose origins can be traced back to Hong Kong.
"The creation of a new international wealth and premier banking division signals HSBC's intent to be the bank of choice for the rich," noted Russ Mould, investment director at AJ Bell trading group.
"The Middle East is expected to be a major opportunity for the group given its significant wealth and HSBC will want to have people on the ground ready to serve."
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said cost-cutting was "a big driver" of the changes.
She added that "fresh efficiencies (are) likely through the simplification of its geographical structures and the merger of its commercial and institutional banking operations".
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