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HSBC picks insider John Flint as chief executive

HSBC picks insider John Flint as chief executive

October 13
00:23 2017

HSBC has stuck with its tradition of promoting from within its top ranks by naming John Flint, head of the bank’s retail and wealth management arm, as its next chief executive, a clear sign new chairman Mark Tucker will opt for continuity.

Several top 10 HSBC shareholders recently told the Financial Times that pressure on Mr Tucker to hire an outsider and launch a drastic shake-up of the bank had faded since its share price rallied over the past 18 months.

Critics had argued HSBC was bloated following ill-advised acquisitions and had been underperforming its US and European rivals, but Mr Tucker argued improvements have already taken root and Mr Flint was the ideal candidate to follow them through.

“For me it is about momentum, and the business already has momentum, but it is about ensuring we continue that,” Mr Tucker told the FT. “John now needs time to take a step back and think of the priorities.”

The seemingly swift and smooth process to appoint Mr Flint, 49, contrasts with the internecine feuding that broke out for weeks before the bank ended up choosing his predecessor Stuart Gulliver to replace Michael Geoghegan as chief executive in 2011.

“We did a good deal of thinking about the type of person we wanted for this role in our discussions at the board,” added Mr Tucker, who was the first chairman to be hired from outside the bank when he joined from Asian insurer AIA. “I didn’t know John before this, so I went into it completely openly and he was clearly and unanimously the best candidate.”

Mr Flint will take over from Mr Gulliver, 58, after the bank’s annual results on February 21 of next year.

Shares in HSBC fell 1.4 per cent on the news of Mr Flint’s appointment. However, they are up more than 30 per cent in the past year and recently regained positive territory in the period since Mr Gulliver took over at the start of 2011.

“The current chief executive has worked hard to turn the bank around and set it up for the next CEO to take forward into a stronger growth phase and continuing the ongoing tilt towards Asia,” said Hugh Young at Standard Life Aberdeen, a top 10 investor in HSBC. “Appointing an internal candidate will make that transition smoother and keep HSBC’s strong culture intact.”

James Chappell, banks analyst at Berenberg in London, said while the appointment was a sign of continuity, the market would watch closely for any sign of “major changes” to the current strategy. “Appointing an internal candidate tends to mean there will be little change in the strategy, but with a new chairman and a new CEO, you wouldn’t rule out something more than expected.”

Mr Flint was long seen as the favourite internal candidate, though he faced competition from finance director Iain Mackay and investment banking boss Samir Assaf — raising questions in some minds over whether they will stay. He was the preferred choice of Mr Gulliver, having flourished under his chief executive’s mentorship when they worked together in its global markets business.

The incoming chief executive has spent his entire career at HSBC since joining the “international manager” training programme in 1989, including spells as treasurer during the global financial crisis, overseeing strategy and a 14-year stint mostly at its investment bank in Asia, where the group makes over three-quarters of its profit.

HSBC said Mr Flint, no relation to Mr Tucker’s predecessor Douglas Flint, will be paid a base salary of £1.2m a year, with a “fixed pay allowance” of £1.7m a year and a pension allowance of £360,000 a year.

His contract also provides for an annual incentive award of up to 215 per cent of his base salary, and a long-term incentive award of up to 320 per cent of his base salary.

Mr Tucker praised the “outstanding track record” of Mr Gulliver, pointing out that the outgoing chief executive has delivered a total shareholder return of 66.8 per cent, including $60.7bn of dividends and a recent $5.5bn share buy-back.

Mr Gulliver, who announced his intention to retire shortly after Mr Tucker was hired as chairman, will stay on as an adviser until he leaves on October 11 2018.

“Stuart has led HSBC through a challenging and difficult period with great energy and commitment and successfully reshaped the business strategy of the bank,” said Mr Tucker, adding that he had done “important work of putting in place global standards for identifying and preventing financial crime”.

Mr Gulliver’s time at the helm of HSBC was blighted by a $1.9bn fine by US authorities for breaching sanctions and money laundering rules, as well as criticism over the “Swiss leaks” dossier that revealed widespread tax avoidance by customers of its Swiss private bank.

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