HSBC named John Flint as its next chief executive officer after new Chairman Mark Tucker opted not to break with tradition and tapped a long-serving insider to run Europe's largest bank.
Flint, 49, currently head of retail banking and wealth management, HSBC's largest division, will take over from incumbent Stuart Gulliver in February, according to a statement on Thursday. He joined the bank's management training program in 1989 and rose through the ranks of its Asian trading floor before returning to Europe 13 years ago to take on senior roles spanning the consumer and investment banking sides of the business. He's been treasurer, deputy head of markets, chief of staff and head of strategy.
"He's worked in all our main markets, he's worked in many of the group's key roles, he's been involved in HSBC through critical stages of development through the financial crisis," Tucker said in a phone interview with Bloomberg. "He has a vast amount of experience and exposure. He's got a very good track record of building high performing teams."
By picking a 28-year veteran, Tucker, himself an HSBC outsider who replaced Douglas Flint as chairman on Oct. 1, has bowed to the lender's tradition of spurning CEO candidates without a lengthy history at the firm. Tucker also considered external candidates, including Peter Hancock, the former boss of American International Group Inc., Bloomberg News has reported.
Flint will take over a London-based bank focused on Asia that may be starting to grow again after five years of declining revenue. His predecessor spent much of his tenure shrinking HSBC's vast global network, exiting businesses and countries and enduring several costly misconduct scandals. The new chief's tasks will likely include improving the bank's technology, continuing Gulliver's "pivot to Asia" and $100 billion of investment in China's Pearl River Delta region, and growing the asset-management unit.
"Back in 2011, HSBC was looking at trimming its balance sheet with disposals and reshaping a number of regions while also handling litigation and investigations," said Gildas Surry, who helps manage 1.2 billion euros ($1.4 billion) of financial-sector debt at Axiom Alternative Investments in London. "Under Flint, the bank will be focusing on organic growth and capital generation while continuing to contain costs and risk-weighted assets."
HSBC had drawn every one of its previous 21 top executives from its own ranks over its 152-year history, according to the bank's records. Flint and other internal candidates had sought to persuade Tucker, the 59-year-old former CEO of the Hong Kong-based insurer AIA Group Ltd., that the recent stock rally and signs of revived revenue growth justified maintaining continuity with the current management team and its 3-year-old strategy.
Flint will receive a potential pay package of 9.7 million pounds ($12.3 million), including a base salary of 1.2 million pounds, a "fixed-pay allowance" of 1.7 million pounds, and bonuses that could reach 6.4 million pounds, HSBC said. The lender boosted Gulliver's potential pay to the same amount earlier this year.
The incoming CEO would have emphasized the breadth of his experience at HSBC, including his ability to handle egos at the investment bank as a former trader, according to people familiar with his thinking. He also placed the importance of preserving the bank's culture at the center of his pitch, arguing that another newcomer beside Tucker would represent a level of change and disruption to the firm's that could derail recent progress, they said.
"Flint is a veteran in the bank," said Luca Evangelisti, a credit analyst in London with Jupiter Asset Management Ltd., which owns HSBC bonds. "The appointment shouldn't come as a big surprise to the market."
The shares were little changed at 750.7 pence at 12:17 p.m. in London trading, valuing the bank at 150 billion pounds.
HSBC is steeped in tradition, stemming from the days when the Hongkong and Shanghai Banking Corporation financed trade across the British Empire. Flint helped oversee a relaunch of the international manager program, people with knowledge of the program said. It seasons promising young executives with global postings that often turn into lengthy, civil-service-type tenures, such as Flint's own.
Other potential internal candidates included Samir Assaf, the head of the investment bank; Antonio Simoes, who runs the bank's U.K. and European regional operations; global head of banking Matthew Westerman and Finance Director Iain Mackay, people familiar with the matter have said.
The Portsmouth Polytechnic economics graduate was born in Yorkshire, is married with two children and has given few interviews in his period at HSBC.
His relationship with Tucker will depend on how quickly he can galvanize revenue growth and deliver a double-digit return on equity, considered the bare minimum in profitability by investors. Sam Laidlaw, the former head of HSBC's board nomination committee, said earlier this year that the new chairman "doesn't have patience for a lot of time-wasting."
By announcing a successor quickly — Tucker only joined the bank and moved to London in September — the chairman has avoided a repeat of the boardroom battle that led to Gulliver succeeding Michael Geoghegan six years ago. Hong Kong tycoons who were both clients and shareholders in the bank, such as the billionaire Li Ka-shing, intervened to ensure an internal successor was picked when news leaked that external candidates were being considered, according to reports at the time.
Flint's "experience enables him to know better than anyone what HSBC is capable of," Tucker said.