HSBC reshuffles decks as the bank braces for a more challenging operating environment
- Macroeconomic outlook more gloomy than when John Flint became CEO
- HSBC’s directors less tolerant of underperformance in changed environment, analysts say
John Flint, then-HSBC chief executive, declared in June of last year that it was time for the bank “to get back into growth mode”.
Under his predecessor Stuart Gulliver, the lender, once known in its advertising as the “world’s local bank”, had cut thousands of jobs, shrunk its global footprint from 87 countries to 67 and spent tens of millions of dollars to revamp its compliance following a scandal over its money-laundering controls that saw it pay US$1.9 billion in a settlement with US authorities.
The outlook was generally positive at the time: central banks, including the Federal Reserve, had begun tightening after a decade of historically low interest rates. And Flint was betting HSBC could further expand its business in fast-growing Asian markets which account for about half of its revenue.
Fourteen months later, Flint is out of a job and the macroeconomic environment is a lot grimmer as tensions over trade and technology have escalated between the United States and China, sparking a realignment of the global supply chain.
The bank also has been forced to go on a charm offensive with Beijing as it has faced calls by some in China to be placed on an “unreliable” foreign entities list following the arrest of Huawei Technologies’ chief financial officer in Canada last year.
Flint’s unexpected exit shows the lower tolerance that HSBC’s directors have for underperformance, particularly as the lender faces more challenging market conditions, according to analysts. The bank missed a key target for expense growth last year and a more positive first half opened the door for a smooth exit.