HSBC CEO John Flint Is Out After 18 Months in Role -- 3rd Update
August 04 2019 - 11:38PM
Dow Jones News
By Margot Patrick and Quentin Webb
HSBC Holdings PLC said late Sunday that Chief Executive John
Flint is out and new leadership is needed to meet the bank's
challenges.
The surprise announcement, just 18 months after Mr. Flint was
elevated to the CEO role, signals a potential change in approach at
one of the world's largest banks. With a market value of $159
billion, the London- and Hong Kong-listed lender is worth more than
Citigroup Inc., even though its stock has fallen under Mr. Flint's
tenure.
Mr. Flint was the top choice of the board under its then newly
appointed chairman, Mark Tucker. The 51-year-old had been regarded
as a safe choice because of his decadeslong career at the bank, and
he made few changes to the bank's strategy during his tenure.
But his low-key style frustrated some, according to some people
within the bank, and the board decided he had to go for HSBC to
keep up and get ahead of business conditions and world events.
"We've made a decision by mutual agreement. In an increasingly
complex and challenging global environment, the board feels a
change is needed to make the most of the opportunities before us,"
Mr. Tucker said in an interview.
In a statement, Mr. Flint said it had been a privilege to spend
his entire career at HSBC, which he joined from college as a
trainee on its international manager program. "I have agreed with
the board that today's good interim results indicate that this is
the right time for change, both for me and the bank," he said.
HSBC said Mr. Flint will leave his role immediately but will be
available to assist HSBC with the leadership transition. The bank's
global commercial banking head, Noel Quinn, will take temporary
charge of the CEO role while a search is carried out, HSBC
said.
When he started as CEO in February 2018, Mr. Flint had been
expected to ride a wave of improving profit as global interest
rates started to rise and the world economy looked rosy. But those
expectations were dashed as central banks began lowering rates
again and geopolitical tensions roiled markets.
As of Friday's close, HSBC's Hong Kong-listed shares had fallen
24% since Mr. Flint took charge, underperforming a 20% drop in the
MSCI World Banks index.
The index includes JPMorgan Chase & Co., Bank of America
Corp. and other major American and European banks.
In early trading in Hong Kong on Monday, the shares fell 1.6% to
HK$61.15 ($7.81) a share, their lowest since October 2018.
Parts of HSBC's business have been under pressure from trade
tensions between the U.S. and China, which has curbed trade and
investment for some customers, albeit to a limited degree,
according to the bank.
HSBC also faces a potential deterioration in earnings in its
British arm from the U.K.'s pending exit from the European Union
and has lagged behind on plans to turn around its U.S.
business.
As of Friday's close, HSBC shares were valued at about 0.87
times book value, according to Refinitiv data, based on consensus
estimates for the coming 12 months.
A bank whose stock is trading below book value could signal that
investors have questions about its capital strength or future
profitability.
On the same basis, Bank of America and JPMorgan's shares trade
at 1.04 and 1.47 times book value respectively, while Citigroup and
Standard Chartered PLC trade below book value, Refinitiv data
show.
HSBC released second-quarter earnings along with the
announcement on Mr. Flint stepping down, posting $4.37 billion in
net profit, up from $4.1 billion in the prior-year quarter, on
higher revenue.
It said its common equity tier 1 ratio, a measure of capital
strength, had risen to 14.3% as of the end of the first half, up
0.3 percentage point from yearend 2018.
The bank also said it intends to buy back up to $1 billion of
its shares.
HSBC has replaced or removed several top bankers over the past
year to improve the performance of key businesses.
It recently hired a Citigroup veteran to take over its lagging
U.S. business, while one of its co-heads of global banking was
scheduled to depart this summer.
Write to Margot Patrick at margot.patrick@wsj.com and Quentin
Webb at quentin.webb@wsj.com
(END) Dow Jones Newswires
August 04, 2019 23:23 ET (03:23 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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