The Daily Telegraph - 06.08.2019

The Daily Telegraph Tuesday 6 August 2019 *** 29

If John Flint wasn’t the man for the job then it is better that the bank’s board moved quickly

O

uch. The defenestration of John

Flint from HSBC is about as

brutal a whacking as the bank,

usually a model of circumspection by

the cut-throat standards of global

finance, is capable of. Flint’s time as

the bank’s chief executive lasted only

18 months and he leaves without a

successor in place. The bank said that

Flint would “remain available to assist

HSBC with the transition” but it

immediately removed him from the

leadership page on its website. There

was even a hint in the statement that

he wasn’t up to the job in an

“increasingly complex and challenging

global environment”.

That was as close as HSBC came to

an explanation for regicide. But just

how much more complex and

challenging is the global environment

than 18 months ago? Clearly things are

tricky. But global financial regulation

is pretty set. Many of the issues that

the bank faces were already in

evidence a year and a half ago. Donald

Trump was shaping up for a trade war

with China, the UK had voted to quit

the EU and pro-democracy protesters

had taken to the streets of Hong Kong

• the bank’s single biggest market. If
  anything, these issues highlight why
  now is not a great time for HSBC to be
  CEO-less. 
  Clues may lie in how the bank went
  about selecting Flint for the top job.
  On the face of it, HSBC went through a

lengthy and rigorous selection

process. In reality, there was always a

feeling that Flint was Gulliver’s

anointed successor.

The new chief executive took over

at almost exactly the same time as

Mark Tucker was appointed as HSBC’s

new chairman. This was a function of

HSBC’s history. Gulliver and Tucker’s

predecessor Douglas Flint both

assumed their jobs in 2010 following a

boardroom tussle. 

This made it inevitable that Gulliver

and Douglas Flint would leave at

roughly the same time. But it also

meant that the incoming Tucker, the

first outsider ever to chair HSBC,

essentially had Flint foisted on him.

It has been suggested that there was

a board split on strategy. This is

unlikely. Flint, as the continuity

candidate, backed Gulliver’s pivot

towards China and the Pearl River

delta in particular. Tucker, the former

chief executive of the Asian life insurer

AIA Group, is also a fully paid up

Sinophile. 

Clearly, global banks with ambitions

in both the US and China have a very

delicate balance to strike in the face of

an escalation in the rhetoric between

Washington and Beijing. That said,

HSBC’s decision to focus on China was

a no-brainer just two years ago and it’s

a no-brainer now. Ultimately, there are

two possibilities. One is that the world

has changed so dramatically in the

past 18 months that Flint was no longer

the right person to lead the bank. The

other is that he wasn’t the right person

18 months ago.

The second, more prosaic,

explanation seems likelier. If that’s

the case, HSBC has done well to move

quickly.

HSBC boss

ousted after

less than 18

months in job

By Harriet Russell

and Michael O’Dwyer

HSBC  has unexpectedly parted ways

with its chief executive John Flint  by

“mutual agreement” just 18 months af-

ter he was appointed to the role, as the

bank revealed plans to cut north of

4,000 jobs in a drive to lower costs and

meet future profit targets.  

Mr Flint’s surprise exit followed re-

ports of differences of opinion with

Mark Tucker, HSBC’s chairman, over

the execution of his strategy.

Announcing first-half results for

2019, the bank said it planned  to cut

around 2pc of staff globally, with the

“majority” of affected employees al-

ready notified.  The board declined to

confirm exactly where it plans to re-

duce staff numbers, although  cuts

were  likely to “touch every part of the

bank”, according to Mr Tucker. 

Mr Tucker insisted there had been

no personality clash, nor any disagree-

ment over strategy in the lead up to Mr

Flint’s departure. “This is a unanimous

decision of the HSBC non-executives,”

he said. “Personalities have not been a

factor in this at all.” Mr Tucker claimed

that Mr Flint had succeeded in “taking

the organisation forward.”

“On behalf of the board, I would like

to thank John for his personal commit-

ment, dedication and the significant

contribution that he has made over his

long career at the bank,” said Mr

Tucker. “Today’s positive interim re-

sults particularly reflect John’s achieve-

ments as group chief executive.” 

He said that although HSBC “is in a

strong position to deliver on its strat-

egy”, a change of chief executive was

necessary.

Mr Flint said it had been “a privilege

to spend my entire career with HSBC”,

after first joining as a graduate trainee. 

In a farewell message to staff, Mr

Flint said: “Over the course of the past

18 months, I have sought to elevate the

human dimension of life at HSBC and I

have been enormously encouraged by

your response. I hope that during my

time as group chief executive I have

given you food for thought, and the

confidence to keep exploring what it is

that makes the organisation so special.”

Mr Flint is departing as a “good

leaver”, which means he will be enti-

tled to any stock options that vest after

he leaves the company. Although Mr

Flint has stepped down from day-to-

day duties with immediate effect, he

remains “available” to the board. 

Investec’s Ian Gordon said the situa-

tion appeared to be “a simple case of

the board choosing a different pair of

hands to execute a substantially un-

changed strategy” just with “more em-

phasis on cost control and revenue

growth”. Mr Gordon said Mr Flint’s exit

nevertheless demonstrated “a rather

rapid change of mind”. One of HSBC’s

largest  shareholders said they sus-

Continued from Page 27

of the eurozone sovereign bond market

further into uncharted terrain. The

Euro Stoxx 50 index of equities has

fallen 5pc since late last week.

While the Chinese government says

that 7 is an arbitrary level of no macro-

economic significance, it has inter-

vened repeatedly in the past to prevent

this threshold being threatened.

In case there was any doubt over the

motive of yesterday’s action, the PCOB

issued a statement linking the new rate

to “unilateralism and trade protection-

ism measures and the imposition of tar-

iff increases on China”. While it did not

mention the US by name, it clearly

meant Mr Trump’s latest threat to im-

pose 10pc tariffs on all remaining Chi-

nese goods in early September.

The PBOC vowed to keep the cur-

rency “fundamentally stable”, but it is

walking a fine line. Capital controls are

tighter than they were during the cur-

rency scare of 2015-2016 when China

was losing $100bn (£82bn) of foreign

exchange reserves a month, but money

is still leaking out. Confidence is in-

creasingly fragile. “The worry is that a

break beyond 7 could send the Chinese

currency into a vicious circle in which

selling leads to more selling,” said Ke

Baili from Caixin.

Kyle Bass, a long-time China bear at

Hayman Capital, said a “mass exodus”

of capital is already under way as politi-

cal protest in Hong Kong reaches crisis

point and China’s debt-driven growth

model reaches the limits. “The collapse

has just begun,” he said.

Most analysts say the move by the

PBOC is a deliberate choice, but that is

hardly more reassuring for investors. It

means that the Chinese Communist

Party is willing to risk a full-blown con-

flict with Washington on every eco-

nomic front. Beijing has simultaneously

ordered state bodies to halt purchases

of all farm products from the US.

This escalation comes at a sensitive

time. A White House meeting in late

July discussed use of the US Treasury’s

Exchange Stabilization Fund to buy

foreign currencies and drive down the

dollar as a matter of policy, an extraor-

dinary moment in the history of the

world’s paramount reserve currency. It

is no surprise that gold has surged to a

five-year high of $1,470.

The issue is now back as a red-hot

theme. Mr Trump’s trade guru, Peter

Navarro, said at the weekend that cur-

rency manipulation by China is one of

its “seven deadly sins”.

Capital Economics said China ap-

pears intent on neutralising US tariffs

by letting currency slide pari passu, im-

plying a devaluation of up to 10pc. This

means a parallel yuan devaluation

against the rest of the world. It effec-

tively exports trade stress to third

countries and risks pushing much of

East Asia into a deeper downturn. The

eurozone is also in the firing line.

Yuan devaluation guarantees a

full-on superpower showdown

New car sales fall

again but electric

vehicles rise 71pc

By Michael O’Dwyer

THE number of new cars registered fell

for the fifth consecutive month in July,

but Britons purchased almost three

times as many new electric cars as they

did a year ago.

Petrol and diesel models still account

for more than nine in every 10 new cars

sold despite the rising popularity of

electric vehicles.

Sales in July fell 4.1pc compared with

the same month last year as just over

157,000 cars left showrooms, accord-

ing to figures from the Society of Motor

Manufacturers and Traders (SMMT).

“Despite yet another month of de-

cline, it’s encouraging to see substan-

tial growth in zero emission vehicles,”

said Mike Hawes, SMMT chief.

Just over 14,000 battery electric cars

have been sold so far this year, up 71pc,

while plug-in electric hybrid sales

plunged almost a third to 16,687.

Government grants for new low-

emission cars were cut in October and

excluded plug-in hybrid cars entirely.

Hybrid electric sales were up by a

fifth to just under 57,000 this year.

7.0 7

The offshore rate the yuan was valued at

against the dollar yesterday, its first time

beyond 7 since the global financial crisis

Business

BEN WRIGHT

COMMENT

HT

pected it was Mr Flint’s “lack of pace

and desire” to simplify  the business

that led to his shock departure, assert-

ing that Mr  Tucker and Mr Flint “did

not get on”.

Noel Quinn will take interim charge

until a full-time appointment is made,

the bank said. Mr Quinn has been HS-

BC’s head of global commercial bank-

ing since 2015 and has spent 32 years at

the bank. Mr Tucker called Mr Quinn

“the right person for the role for the

immediate future” in light of his

“strong track record of delivery... good

client relationships and deep global ex-

pertise”.

Mr Flint’s departure was a “surprise”,

analysts at Citi said, adding that Mr

Tucker and  the bank’s board had

“clearly lost confidence in the outgoing

[chief executive’s] ability to navigate

the tougher outlook faced by HSBC”.

The company warned that the out-

look for interest rates and “revenue

headwinds” in both its global banking

and markets and its retail banking and

wealth management divisions meant

that it did not expect to meet its target

return on tangible equity, one of its key

metrics. 

Mr Flint’s departure came as HSBC

announced a 15.8pc rise in half-year

pre-tax profit to $12.4bn (£10.2bn). It

also intends to launch a share buy-back

of up to $1bn, which should commence

shortly.

John Flint, left, and

Mark Tucker are

reported to have

had differences

of opinion in

navigating the

tougher outlook

faced by HSBC

AFP/GETTY/REUTERS

John Flint

Feb 2018 –

Aug 5 2019

Stuart Gulliver

Jan 2011 –

Feb 2018

Michael

Geoghegan

Mar 2006 –

31 Dec 2010

Stephen Green

1 June 2003 –

26 May 2006

Keith Whitson

1998 – 2003

John Bond

1 Jan 1993 to

May 1998

William Purves

1986 – 1992

Michael

Sandberg

1977 – 1986

Guy Sayer

1972 – 1977

Jake Saunders

1964 – 1972

Past masters

HSBC chiefs

since 1964

All woman Rita Ora is fronting a campaign for German

fashion brand Escada. The singer, 28, said: “I’m pleased to

work with a brand that champions female strength.”

ESCADA/MEGA

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