HSBC axes CEO Flint after only 18 months

London

HSBC Holdings Plc abruptly ousted its chief executive officer after just 18 months, citing an "increasingly complex" environment, and announced a new round of job cuts.

The exit of 51-year-old John Flint, who started at HSBC as a trainee, highlights tension with Chairman Mark Tucker, known to be a hard-charging executive who was the first outsider to fill the post in the bank's 154-year history.

They clashed over style - with Mr Flint focused on issues such as conduct and Mr Tucker taking a more data-driven approach - and priorities, as Mr Flint failed to address the slow-growth US business, say people familiar with the matter.

HSBC disclosed the departure of Mr Flint, 51, alongside its half-year results on Monday as it forecast a gloomier outlook for its business, with an escalation of a trade war between China and the United States, an easing monetary policy cycle, unrest in its key Hong Kong market and Brexit.

Mr Tucker told Reuters a change of CEO was needed to accelerate progress in HSBC's major strategic priorities, such as the turnaround of its US business. "It's the right time for change, and doing it clearly and decisively from a position of strength is very important," he said, adding that the search for a new CEO could take up to a year.

"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," Mr Tucker said.

Noel Quinn, head of global commercial banking, will assume the CEO post on an interim basis, HSBC said.

The bank also confirmed its plans to eliminate jobs, axing more than 4,000 posts and warning that senior executives will be a focus of the cutbacks. "We expect this year to have US$650 million to US$700 million of severance costs; that involves less than 2 per cent of our workforce," chief financial officer Ewen Stevenson said in a call with analysts. "It's about 4 per cent of our total salary costs, so you should assume from that it is targeted at more senior people in the organisation."

Shares in HSBC fell as much as 2.1 per cent before recovering to trade 1.3 per cent lower at 11.03am in London.

One of Mr 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 on Monday that first-half adjusted jaws was a positive 4.5 per cent.

His departure follows exits last month of US head Patrick Burke and Greg Pierce, who ran the US markets business.

The lender also said it didn't expect to achieve its targeted 6 per cent return on tangible equity in the US by 2020.

HSBC faces a dilemma between the need to invest in its global businesses and the pressure to show it has costs under control.

The bank had budgeted investments of US$5 billion this year, but it's been measured in laying that out, spending just US$1 billion in the first three months. Earlier, the bank also said as part of its earnings that it would shortly begin a buyback of up to US$1 billion.

HSBC posted its results on a day when Hong Kong, its second home, was plunged into fresh chaos due to a general strike, as protests against an extradition bill evolved into a broader backlash against the government.

Mr Tucker played down the impact of that on the bank's business and said the bank remained confident about the future of the Asian financial centre. REUTERS, BLOOMBERG