John Flint’s tenure running HSBC Holdings PLC has come to an abrupt end, with the bank announcing early yesterday in Asia that the chief executive officer was stepping down.
The board believed a change was needed to help the bank, which has seen its Hong Kong-listed shares fall about 15 percent in the past year, meet the challenges it faces in an increasingly complex environment, chairman Mark Tucker said in a statement.
Some HSBC executives in Asia expressed surprise at the move, saying there had been no indication that a change was afoot.
Photo: Reuters
Global banks are struggling with low to negative rates, trade tensions slowing growth and disruptions from automation.
European firms in particular have found it hard to cope: Deutsche Bank AG is restructuring its operations and cutting 18,000 jobs, while Societe Generale SA plans to cut about 1,600 positions.
HSBC, which makes most of its money oiling the wheels of trade between East and West, has faced repeated questions about why a business heavily skewed toward some of the world’s fastest-growing economies cannot make better returns.
Flint’s exit signals the board’s desire to accelerate change alongside a “potentially rapid deterioration” in outlook, JPMorgan Chase & Co analysts wrote in a report.
He is being replaced on an interim basis by Noel Quinn, head of global commercial banking.
The lender, which also released its latest quarterly results several hours earlier than scheduled, did not give a reason for the decision.
Flint, 51, joined HSBC in 1989 and took over as chief executive in February last year.
The bank said second-quarter adjusted pretax profit was US$6.2 billion, higher than the US$5.7 billion analyst estimate compiled by HSBC.
HSBC has struggled to win over investors. One of Flint’s key promises was that revenue gains would outpace cost increases, a trend the bank refers to as positive jaws.
He failed to achieve that in his first year at the helm, though the bank said yesterday that first-half adjusted jaws was a positive 4.5 percent.
At least 500 jobs were set to be culled within global banking and markets, people familiar with the matter said in May, with London likely to be in the front line.
Flint’s departure follows exits last month of US head Patrick Burke and Greg Pierce, who ran the US markets business.
HSBC expects severance costs to range from US$650 million to US$700 million this year, with annualized savings of a similar amount, according to an investor presentation.
The lender also said it would shortly begin a buyback of up to US$1 billion.
The bank said that it did not expect to achieve its targeted 6 percent return on tangible equity (RoTE) in the US by next year.
While HSBC would continue to target overall RoTE of more than 11 percent next year, “we will not take short-term decisions that could jeopardize the long-term health of the business,” it said.
First-half adjusted pretax profit rose 6.8 percent from a year earlier to US$12.5 billion. In the second quarter, adjusted operating expenses rose to US$8.1 billion from US$7.8 billion.
“Our sense is the climate is getting increasingly complex, increasingly challenging, and that we both agree a change is needed to really make the most of the opportunities ahead of us,” Tucker said in an interview yesterday.
The CEO hiring process would take six-to-12 months, and consider both internal and external candidates, he said.
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