HSBC: The world’s interim bank

He was replaced by Greg Guyett, who joined from East West Bank in October 2018 and had previously served at JPMorgan for 30 years.

HSBC’s US operation, identified in its quarterly results as an area of particular concern given the interest rate outlook and revenue headwinds, is also to have a new CEO. Michael Roberts is joining from Citigroup to take over from Patrick Burke, who is retiring after 30 years at the bank.

One exception to the trend was the hard-charging Matthew Westerman, who was brought in as co-head of global banking from Goldman Sachs, fired lots of people and was then let go in November 2017 after less than two years.

It now looks like he was an outsider before it became fashionable at HSBC.

So, what might the latest change tell us? First off, it suggests that when Tucker came on board, he might have been handed a solution that he didn’t want – Flint as CEO – but which he accepted as part of the package for his own appointment.

Fast forward to 2019 and it appears that Tucker – often seen as the real decision-maker, with Flint responsible for execution of his wishes – had finally opted to shift things more to his own liking.

HSBC considers Flint a “good leaver”, but Tucker’s statement on his departure certainly has the ring of a comment on his ability to perform in the current environment.

“In the increasingly complex and challenging global environment in which the bank operates, the board believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us,” he said.

In the immediate aftermath of Flint’s departure, much has been made of ructions between him and Tucker, but the influence of CFO Stevenson might also have been important.

What might Stevenson and Tucker turn their attention to next? The global banking and markets division, run by Samir Assaf since 2011, surely has to be in the firing line.

The first half of this year has not been a great period, even taking into account the market conditions and geopolitics. The unit’s second-quarter revenues fell 13% year on year, and are down 3% on a 12-month basis. Its pre-tax profits have fared even worse, falling 44% and 10%, respectively.

Quinn, meanwhile, looks as interim as HSBC describes him. One take is that the appointment gives Stevenson the breathing space to make his mark – and pave the way for a step up to the big job.

Doubtless there will be the usual smattering of external candidates touted, and the bank has been clear that it will look externally. But Stevenson, practically an external candidate anyway given his recent arrival, must start with a foot in the door.

Asia

There is one caveat here: Asia.

With the upheaval in Hong Kong, a reopening of the debate about whether HSBC should move its head office back there looks unlikely. Some say Tucker would be in principle happy to do so, but the issue is surely now more sensitive than ever.

That said, the chat in various quarters in the last 24 hours that the upheaval might signal a downsizing of HSBC’s commitment to China more broadly – given, in part, Flint’s links to the Pearl River Delta focus of the firm – is surely misguided.

The theory circulating that one reason Flint had to go was in order for the bank to appease China for its involvement in the extradition from Canada earlier this year of Huawei’s CFO might be a conspiracy too far, but even that would indicate that the bank’s focus on the Chinese market is hardly wavering.

And HSBC made $11.5 billion of its profit in its Hong Kong business in 2018 – which must be a candidate for the biggest sum made in one city of any financial institution in the world.

This is Stevenson’s challenge – he doesn’t have the Asia experience of some of his predecessors. Gulliver had certainly done his time, but John Flint hadn’t.

But if another candidate ends up as the bank’s “permanent” CEO – whatever that means at HSBC – they may find that they are having to cope with at least two others pulling the strings.