Holdings PLC went into defense mode Monday to cope with a worsening outlook for the global economy, ousting Chief Executive John Flint and saying it will roll back spending and slash thousands of jobs.
The bank, one of the world’s largest lenders to households and companies and in financing global trade, said the changing conditions led it to part ways with Mr. Flint, 51, who was CEO for just 18 months in a three-decade career at the bank. Chairman Mark Tucker said Mr. Flint’s departure doesn’t signal any change in strategy, but that the board felt a leadership shift was needed to respond to “an increasingly complex and challenging global environment.”
“Circumstances change and we need to adapt,” Mr. Tucker said.
The move comes as HSBC feels pressure across some of its largest markets, including in Asia, where the U.S.-China trade dispute is curbing foreign investment and drawing new supply chain lines for manufacturers. In Britain, where the bank is based, a pending exit from the European Union is denting consumer and business confidence and raises the prospect of a possible recession.
The bank is also still in the midst of a multiyear turnaround of its U.S. subsidiary, and recently hired a
veteran to pick up the pace of the restructuring there. It joins other global banks including Barclays PLC and Deutsche Bank AG in making job cuts to counteract revenue declines.
HSBC stock fell 3% in a broadly lower market after President Trump said China manipulated its currency, a sentiment that highlighted HSBC’s risks in navigating geopolitical tensions.
In an interview Monday, HSBC’s finance director Ewen Stevenson said up to 2% of the bank’s 237,685 employees could lose their jobs. He said the cuts, aimed at shaving up to 4% off HSBC’s wage costs, target senior roles and will come from a mix of layoffs and attrition as people leave for other jobs. HSBC said severance costs this year would be $650 million to $700 million, saving it around that much annually going forward.
The company said it would also pull back on spending plans Mr. Flint announced in June 2018 when the economic outlook was better, paring planned investments in areas such as digital banking and productivity improvement down to a lower range of $14.5 billion to $15 billion over the three years to 2020, from a $15 billion to $17 billion target.
Mr. Flint’s sudden departure after such a short tenure by CEO standards surprised analysts and investors, and for some left open the possibility of more significant strategic shifts to come, including continuing to shrink its global footprint.
HSBC late Sunday said Mr. Flint had agreed to leave the CEO job to make way for new leadership. The move came after months of concern over Mr. Flint’s leadership style and ability to take decisive action, people familiar with the bank said. He was formally dismissed at a London board meeting Sunday, the people said.
Joseph Dickerson, a banks analyst at Jefferies, said the board decision showed it “isn’t afraid to make tough decisions,” and should be taken positively by investors as a sign of strong governance.
Mr. Tucker said the bank will consider a mix of internal and external candidates to take over. Noel Quinn, who has been head of global commercial banking, is taking the job in the meantime and is seen as a possible candidate.
Mr. Flint was regarded as a safe choice when he was selected by Mr. Tucker and the board for the role in late 2017. He had been a top pick and protégé of the CEO he replaced, Stuart Gulliver, who led HSBC through a radical strategic overhaul after the financial crisis. The bank, founded in Hong Kong in 1865 to finance trade in Asia and with the West, had swelled into a banking behemoth with branches and offices in 87 countries, but was weakened by the financial crisis and a subsequent regulatory crackdown.
One of Mr. Flint’s tasks had been to simplify the bank, and Mr. Tucker on Monday said that mission would continue. It is now present in around 65 countries.
HSBC posted $4.37 billion in net profit for the second quarter, up from $4.1 billion in the prior-year quarter, on higher revenue.
Write to Margot Patrick at email@example.com
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