By Margot Patrick
HSBC Holdings PLC started 2019 with a chief executive poised for
growth and focused on making its 238,000 employees the "best
version of themselves." It is ending the year with a new boss
cutting thousands of jobs, culling clients and putting businesses
on the block.
The change in approach was triggered by storm clouds in the
bank's two most important markets. Violent antigovernment protests
have rocked Hong Kong, while the U.K. economy is being tested by
uncertainty over its planned exit from the European Union.
The bank, among the world's largest by assets, is also under
strain in China, the country it is counting on for profit. It
angered some officials by sharing information with U.S. prosecutors
about one of its clients, Huawei Technologies Co.
For HSBC's board, the tougher conditions were a wake up-call
that it is still too much bank in too many countries. Its response
in August was to swap out chief executive John Flint, a 30-year
veteran of the bank who improved financial performance but
underwhelmed a chairman looking for quicker fixes.
Chairman Mark Tucker -- the first outsider in the post -- asked
Noel Quinn, head of commercial banking, to be interim CEO. Mr.
Quinn has told colleagues he aims to make the job permanent. Some
analysts predict an announcement as soon as December.
The 57-year-old's plan to earn it: exit low-growth businesses
and ax costs to better compete with international rivals such as
JPMorgan Chase & Co. and Citigroup Inc.
Mr. Quinn has sped up plans to sell HSBC's large French retail
bank and is going deeper with the job reductions that were started
this year.
In August, the bank's finance chief said the lender needs to be
harder on low-profit customers in Europe and "reprice them or
exit." Now, thousands of clients in HSBC's global banking and
markets business and commercial bank are being reviewed to see if
they are worth keeping, people familiar with the matter said.
Analysts anticipate more retail disposals and scaling back in
investment banking activities. HSBC exited around 20 countries and
dozens of businesses this decade. But it still has choices to make
on allocating capital across its remaining 65 countries.
"'The world's local bank' was a great marketing line but it
wasn't a great corporate strategy," said Mike Fox, a fund manager
at Royal London Asset Management holding shares in the bank.
In private meetings with investors in recent weeks, Mr. Quinn
has assured them the bank's heart and soul is still in Asia, its
most profitable region, people familiar with his comments said.
HSBC makes around one-third of revenues in Hong Kong, where it
began in 1865.
Mr. Quinn said the bank continues to win business from Chinese
clients despite the Huawei tensions, a person familiar with his
comments said. Data show HSBC worked on several Chinese bond deals
last month, including for state-owned banks.
In 2017, HSBC supplied U.S. investigators with details of what
Huawei told the bank about its business in Iran, according to court
documents and people familiar with the information exchange. The
Justice Department alleges Huawei misled banks about its dealings
in Iran. HSBC cut most banking ties with Huawei in 2017, The Wall
Street Journal previously reported.
An HSBC executive said some Chinese companies opted not to do
business after the bank was attacked in state media. In July, it
was left off a new panel setting China loan rates, and it is still
waiting on a license some rivals received to underwrite corporate
bonds in the country.
People familiar with the matter said HSBC has good standing with
officials. One said Mr. Tucker was invited to attend China's 70th
anniversary parade Oct. 1 in Beijing but couldn't make it.
Mr. Quinn wasn't even in the running in the last CEO search,
shortly after Mr. Tucker joined as chairman in 2017. Plain spoken
and practical, he has been at the bank since 1987. He initially ran
leasing businesses, then went to Hong Kong in 2011 to head
commercial banking in Asia and got the job globally in 2015.
External CEO candidates are division heads at banks such as
Citigroup, and former and current bank CEOs, according to people
briefed on the search.
"Finding an external candidate is very hard. They have to
understand the bank, Hong Kong, and Hong Kong and China," said
Ronit Ghose, an analyst at Citigroup.
Mr. Quinn has said he never expected to be in the job, in part
because he didn't fit the usual profile. Most of HSBC's CEOs rose
through an elite, career-long "international managers" program.
Those include Mr. Flint, 51, who rotated through posts in Asia,
the U.S. and Britain on a regimented track to the C-Suite. He was
Mr. Tucker's pick for the job in 2017, but their styles clashed
almost immediately. Mr. Tucker, who had just completed a successful
run as CEO at insurer AIA Group Ltd., was largely in sync with Mr.
Flint on strategy but considered him too ponderous on decisions,
according to people who worked with them.
Mr. Flint, in turn, found Mr. Tucker to be imperious and not
open to being challenged, according to a person familiar with his
thinking.
Mr. Quinn's decision making is "more instinctive," said an
executive who served with him on HSBC's senior management team.
His name was one of several on a "hit by a bus" list to replace
Mr. Flint in unexpected circumstances. He was chosen after Mr.
Tucker told Mr. Flint his career at the bank was over at a weekly
catch-up meeting in late July at HSBC's private bank in London.
Mr. Flint, asked not to return to his office at HSBC's Canary
Wharf headquarters, called in sick for a few days while the bank
negotiated the terms of his departure and prepared an announcement,
a person familiar with the matter said.
Mr. Quinn "brings pace, decisiveness and ambition," Mr. Tucker
said announcing the appointment Aug. 5.
--Julie Steinberg contributed to this article.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
October 20, 2019 13:49 ET (17:49 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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