HSBC to axe 4,000 jobs after ousting CEO

Lender said senior executives a focus of the cutbacks with severance costs to range from $650 million (Dh2.38billion) to $700m in 2019

HSBC branch in London. Lender announced lay-offs after the surprise departure of chief executive John Flint. AP

HSBC plans to axe more than 4,000 posts with senior executives a focus of the cutbacks following the abrupt ousting of its chief executive after just 18 months.

The exit of John Flint, a 51-year-old who started at HSBC as a trainee, highlights tension with chairman Mark Tucker, known to be a hard-charging executive who was the first outsider to fill the post in the bank’s 154-year history. They clashed over style - with Mr Flint focused on issues such as conduct and Mr Tucker taking a more data-driven approach - and priorities, as Mr Flint failed to address the slow-growth US business, say people familiar with the matter.

Mr Flint's departure follows exits last month of US head Patrick Burke and Greg Pierce, who ran the US markets business. The lender also said Monday it didn't expect to achieve its targeted 6 per cent return on tangible equity in the US by 2020.
HSBC expects severance costs to range from $650 million (Dh2.38billion) to $700m in 2019, with annualised savings of a similar amount, according to an investor presentation.
"Our sense is the climate is getting increasingly complex, increasingly challenging, and that we both agree a change is needed to really make the most of the opportunities ahead of us," Mr Tucker said on Monday.
Mr Tucker was also increasingly at odds with Mr Flint over the CEO's focus on expanding in China, according to sources. HSBC was in an uncomfortable spot over Washington's legal and political tussle with Chinese technology company Huawei Technologies, a major client of the bank. US prosecutors drew on HSBC's relationship with Huawei to build its case against an executive at the telecom company, the Financial Times reported last month.
Mr Tucker denied any personality clash with Mr Flint or disagreement over job cuts, adding on a media call that there had been "absolutely" no pressure from China over the CEO's role.
Noel Quinn, head of global commercial banking, will assume the CEO post on an interim basis, HSBC said.

During Mr Flint's short tenure, the 235,000-employee bank, Europe's biggest by market value, has grappled with a declining stock price, a high-profile sexual harassment case at its investment bank and a failure to hit cost targets, leading to a new programme to eliminate jobs and questions from auditors about how these goals would be met.
Shares in HSBC fell as much as 2.1 per cent before recovering to trade 1.3 per cent lower at 11:03am in London. HSBC, which makes most of its money oiling the wheels of trade between East and West, has also faced repeated questions about why a business heavily skewed toward some of the world's fastest-growing economies can't make better returns.
One of Mr Flint's key promises was that revenue gains would outpace cost increases, a trend the bank refers to as "positive jaws". He failed to achieve that in his first year at the helm, although the bank said Monday that first-half adjusted jaws was a positive 4.5 per cent.
For his part, Mr Tucker, the former CEO of Prudential, rejected talk that he assume the post at HSBC. "Under no circumstances" would he take the job, he said.
The CEO hiring process would take six to 12 months, and consider both internal and external candidates, he said.
HSBC faces a dilemma between the need to invest in its global businesses and the pressure to show it has costs under control. The bank had budgeted investments of $5bn this year, but it's been measured in laying that out, spending just $1bn in the first three months.
Earlier, the bank also said as part of its earnings that it would shortly begin a buyback of up to $1bn. Mr Flint's short tenure as CEO is in contrast to his predecessor Stuart Gulliver, who ran HSBC between 2011 and 2018, and grappled with the impact on the bank of the global financial crisis. During Mr Gulliver's years in charge, the London-based lender faced pressure on its earnings from new regulations and low interest rates and had to navigate misconduct scandals, which revealed widespread compliance failures.