HSBC's New CEO: Mr. Inside With Yorkshire Roots, Global Know-How
(Bloomberg) -- Earlier this year, HSBC Holdings Plc broke with more than a century of tradition and tapped an outsider, Mark Tucker, as chairman. When it came to selecting a new chief executive officer, Europe’s biggest bank went with the ultimate insider.
On Thursday, the lender selected John Flint, the head of retail banking and wealth management, to succeed Stuart Gulliver as CEO on Feb. 21. In an era when global banks are increasingly turning to new faces to manage their fortunes in an unforgiving marketplace, Flint represents something rare -- a banker who’s spent his entire 28-year career in the same institution, rising from a management trainee to the top job.
“John has worked in all our main markets, and he’s worked in many of the group’s key roles,” Tucker, 59, the former chairman and CEO of insurer AIA Group Ltd., said in an interview. “His experience enables him to know better than anyone what HSBC is capable of.”
While Flint, 49, may be a familiar face inside the walls of HSBC, he’s cut a low profile outside the institution. He doesn’t maintain a LinkedIn page, nor does he tweet. The division he leads endured slumping income over the past four years and has been called a fintech laggard. And he lacks the prominence of his counterparts Jes Staley at Barclays Plc or John Cryan at Deutsche Bank AG.
Yet Flint, a buttoned-down banker with a sweep of greying hair and the analytical gaze of a numbers man, is intent on asserting his authority in all areas of the bank, especially the trading floor. Flint won’t hesitate to reassign or fire personnel who don’t fit his plans, according to a person familiar with his management style.
A fan of endurance sports, he once finished Switzerland’s Ironman race, a punishing three-part competition that includes a full marathon on top of a 112-mile bike ride and a 2.4 mile swim. Though too busy to compete these days, he still runs shorter distances and does open water swims to unwind. Flint declined to be interviewed.
Born in Yorkshire, in northern England, Flint attended elementary school for a time in Saudi Arabia when his father worked as a university lecturer in the kingdom. He went on to earn an economics degree with honors from Portsmouth Polytechnic, a small college in Britain’s maritime hub. He wanted to be a banker since he was 15, and applied to HSBC’s International Manager Program on the advice of his high school headmaster, according to a company biography.
He’s been rising through the ranks at HSBC since he joined the bank in 1989, at the age of 21. As a trainee, Flint was steeped in the 152-year-old institution’s ways. The boot camp sends budding executives on two-year tours in HSBC’s operations around the world. Recruits are expected to learn the native language and to “demonstrate the ability to make an immediate impact” on business. Flint completed his stint in Hong Kong and Calcutta.
After laboring at various roles in Hong Kong, Bangkok, and Singapore, Flint was made head of global markets in Indonesia. By 2004, he was running balance sheet management for Europe, the Middle East and Africa, and two years later became group treasurer. He then managed the global asset management unit and in 2013 assumed his current role.
Under his watch, pretax profits at the retail banking and wealth management division slumped almost 20 percent between 2013 and 2016, to $5.3 billion, as the company closed and sold businesses against a backdrop of falling interest rates. More recently, his overhaul has shown signs of bearing fruit. Earnings at the unit jumped 36 percent in the first half of 2017, to $3.4 billion, from the same period in 2016.
Flint’s rotations through HSBC’s businesses served him well. When the board started the search for a successor to Gulliver, Flint placed his knowledge of the bank’s culture at the center of his pitch to the new chairman.
Investors weren’t surprised that HSBC, which has never appointed an outsider to the CEO spot, tapped Flint to pick up where his predecessor left off. Under Gulliver, who took the helm in 2011, and Chairman Douglas Flint, HSBC withdrew from 18 countries and about 100 businesses after the global financial crisis, tougher capital requirements and stiffer regulation prompted an industry-wide retrenchment.
HSBC’s share price has climbed 68 percent over the past five years, compared with a 23 percent gain in the 46-company STOXX 600 Banks Index.
"Stuart and Douglas did a good job tidying up," said Hugh Young, the head of Asia at Standard Life Aberdeen Plc, which holds HSBC shares. "Continuing their work makes a lot of sense, so we’re supportive of having an outsider appointed as chairman, and an insider as CEO."
Now that much of the restructuring is done, Flint must take charge of one of the most influential banking giants in the world, with 1.9 trillion pounds ($2.5 trillion) in assets. It’s also one of the most idiosyncratic. Founded in 19th century Hong Kong, HSBC has deep roots in two home markets on either side of the globe: the U.K. and China. For all its international scope, HSBC has cultivated an insular culture that prizes a go-slow approach over the racy financial engineering that’s driven many of its rivals. It’s little wonder that the bank has opted over the decades to choose CEOs from its own ranks.
Flint, who was a senior executive at a time when HSBC was fined in scandals ranging from market rigging to money laundering, will have to ensure the bank’s reputation doesn’t sustain further damaged from similar misconduct.
Investors will be watching closely to see how Flint gets along with his fellow Brit Tucker, a onetime professional soccer player with the Wolverhampton Wanderers who’s made a name as a turnaround artist. At the top of Flint’s to-do list are improving the bank’s information technology systems, and continuing to push for growth in Asia as well as at the fee-rich asset management division. Earlier this year, Sam Laidlaw, the former head of HSBC’s board nomination committee, said Tucker "doesn’t have patience for a lot of time-wasting."
When it comes to financial technology, Flint will have a lot of work to do to catch rivals like Barclays, UBS Group AG or Banco Santander SA, which have invested aggressively in fintech startups and apps to bring digital banking services to their retail customers and wealth management clients. In September, Autonomous Research in London criticized HSBC’s mobile banking app and called the lender a “laggard” in innovation.
“The bank is well positioned for the future but we must continue to innovate and accelerate the pace of change required to meet the expectations of our shareholders, customers, employees, and society at large,” the new CEO said in a statement.