HSBC to defer appointing chief until after strategy shake-up

Some investors expected HSBC interim leader Noel Quinn or external candidate to be installed this month. Photo / Getty Images

HSBC has decided not to name a permanent chief executive when it unveils a strategic overhaul this month, in a move that risks undermining investor confidence in the plan to reshape the lender dramatically.

Noel Quinn, who was appointed interim chief executive six months ago, is preparing to unveil the shake-up — which will involve at least 10,000 job losses and shrinking HSBC's investment bank — alongside the lender's full-year results on February 18.

Mark Tucker, HSBC chairman, has said that the search to replace John Flint, who was ousted as chief executive in August last year, would take six to 12 months. But three top 20 investors said they were expecting either Mr Quinn or an external candidate to be named as permanent chief executive before the new strategy was unveiled.

They warned that a failure to confirm an appointment would raise concerns over whether the interim leader had the authority to implement sweeping changes of the kind that HSBC is planning. They added that it would be difficult for an external candidate to join partway through a strategic overhaul that had already started.

However, four people briefed on HSBC's plans said Mr Quinn would not be confirmed on or before February 18 and that the search for a permanent successor was still in progress.

Two of the people said a meeting of HSBC's board in Dubai last month, when some directors had expected a decision to be made, broke up without a conclusion on the matter.

"Sometimes these things take a little more time than people would like, but this is an orderly process," said one person briefed on the board's search for a chief executive, adding that the directors needed to arrive at a unanimous decision.

One top 20 investor said: "It would be very, very odd to have what is being trailed as a large restructuring effort, potentially the most radical we've seen from the bank, that is not implemented by the guy who designed it.

"They have had six months, which is long enough to assess internal and external candidates, so if they're not announcing someone, it is quite obvious there is an internal debate as to whether Noel is the right person."

The investor added that Mr Quinn would be "rightly pissed off" if he has to present the plan without being sure that he will be in charge of delivering it.

A second top 20 shareholder said it would be "a big problem if Noel puts the plan in place and then has to go".

Ronit Ghose, a banks analyst at Citi, said: "The stock market is expecting the new strategy . . . to be presented by a permanent CEO. Anything else is like saying we are going into battle, it will be messy, and we don't know the general in charge."

The issue of succession is particularly thorny for HSBC given that the bank has messed up the process in the past. Mr Tucker has told colleagues that he bitterly regrets appointing Mr Flint, while the replacement of the chief executive and chairman in 2010 was marred by acrimony and boardroom splits.

One of the people briefed on the search said "the most important thing is that this is a thorough process and that we come to a correct decision", adding that Mr Quinn was the only internal candidate and "not out of the race".

HSBC declined to comment.

Although Mr Quinn holds his position on an interim basis, he has said he is not a "caretaker". Investors have become increasingly convinced that the job is his to lose after he pressed ahead with the strategic overhaul and made a string of high-profile management changes, including moving the longstanding head of HSBC's investment bank.

On Wednesday, Mr Quinn announced further changes to the executive team. He appointed Stephen Moss as regional chief executive for Europe, the Middle East, Latin America and Canada, while Nuno Matos will become chief executive of Europe. Mr Matos's predecessor, James Emmett — a 25-year veteran of the bank — is stepping down from his role at the end of the month and will fully retire in September.

Written by: David Crow

© Financial Times 2019