HSBC’s interim CEO makes big changes - Comment & Profiles -

HSBC has set a very firm course, meaning that its next CEO will be driving rather than inventing the bank’s strategy, writes Brian Caplen.

Noel Quinn was appointed interim CEO of HSBC only last August. His predecessor, John Flint, left following disagreements with a board that wanted a faster pace of change, according to press reports at the time.

But if anyone thought Mr Quinn was just going to keep the seat warm until a permanent replacement was found (still six months to a year away, according to the bank), they were mistaken. Today’s dramatic announcement of a large restructuring including the loss of 35,000 jobs sets the bank on a firm course that the next incumbent will surely need to follow.

In essence the tilt towards Asia, where the bank generates the bulk of its profits, continues and there is a pull back from investment banking in Europe and the US, as well as a redeploying of capital in Asia. The US retail branch network will be reduced together with a group-wide cost cutting and reorganisation to simplify operations.

Restructuring costs of $6bn and asset disposal costs of $1.2bn will be taken during this year and next so that restructuring takes shape by 2022. So firm is the direction of travel that it is difficult to see the next CEO doing much more than implementing this strategy.

For some potential candidates this must be seen as a drawback as they would no doubt like to stamp their mark on the bank but, in this regard, Mr Quinn has rather removed their opportunity. 

In fact, there must be a strong case for giving Mr Quinn the job permanently. Despite a fall in 2019 profits by one-third, analysts have broadly welcomed the plans and are forecasting a rise in the share price.

Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen

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