HSBC's CEO search ending where it began: Signs point to Quinn

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Stuck in an elevator, Noel Quinn witnessed firsthand the routine travails of then-HSBC Holdings Chief Executive John Flint: His boss was clutching a white belt and an ice bucket, equipment he’d needed to chair a management meeting while in excruciating back pain.

It was a “surreal” encounter, Quinn recalled in an internal video chronicling the life of the head honcho at a global institution with almost quarter-million employees and assets approaching $3 trillion.

Not long after came another surreal moment involving Flint. Quinn was summoned back to headquarters while en route to Heathrow airport by Chairman Mark Tucker. He was asked whether he would fill in for Flint, who would be ousted days later after less than two years as CEO, and did he want the job full-time. He answered yes to both.

Quinn’s rise from obscurity to the glare of a position that paid Flint more than $5 million last year is on track. In internal and external communications, references to the former global head of commercial banking’s role being “interim” have quietly disappeared.

Having said he didn’t see himself as a mere “caretaker” after taking the job in August, he’s now laying out a long-term strategy. He’s putting a stamp on the business that the 15-person board wouldn’t have greenlighted for a short-timer, say former HSBC managers, who asked not to be identified.

In a sweeping overhaul of the executive ranks this week, the 57-year-old Quinn replaced the top investment banker, chief operating officer and chief risk officer.

“My mandate is to run the business not just as an interim CEO, but as the CEO of the bank,” Quinn told employees shortly after he was named.

Meantime, executives are planning to unveil a restructuring early next year that’s expected to close parts of the business, scale back stock trading and divest operations including the French retail unit. A fresh strategy is likely to see HSBC focusing even more resources on Asia — which already provides 90% of profit.

The urgency reflects the headwinds threatening the HSBC franchise. S&P Global Ratings put its A rating on negative watch last month after quarterly profits missed estimates. Not all the troubles are of its own making: Geopolitical challenges from Brexit to unrest in Hong Kong and the U.S.-China trade war have conspired against its bottom line, adding to pressures from negative interest rates in Europe and slowing global economic growth.

HSBC shares have dropped more than 10% in both Hong Kong and London this year, lagging rivals and the benchmark indexes. Flint paid the price, angering Tucker by not moving fast enough.

Now it’s up to Quinn: Senior executives who have worked with him say the British banker is a safe pair of hands and aren’t surprised he is the front-runner to lead the business through its third major restructuring in less than a decade.

Quinn’s rise could have stalled the ambitions of HSBC’s Chief Financial Officer Ewen Stevenson who insiders had tipped as a potential CEO himself. Stevenson has been a driving force behind the cost-cutting program at the bank, leading some staff to dub him the firm’s “internal activist,” in a reference to the impact of an outside investor agitating for change.

Unlike several of his predecessors, Quinn isn’t a product of HSBC’s elite international manager cadre that traditionally produces its leaders, including Flint. He attended Birmingham Polytechnic in central England before training as an accountant. His first job was digging holes on a building site and his banking career began at Forward Trust, a financing and leasing unit of Midland Bank, the U.K. lender that HSBC bought in 1992. He spent the next two decades working his way up the commercial-banking business, spending much of his time in Asia, before emerging at the top of the unit in late 2015.

Behind the scenes, Quinn has taken steps to boost his chances of getting the job. HSBC hired Brunswick Group, the blue-chip public relations outfit, in February, with Susan Gilchrist, the firm’s former CEO and chairwoman of its Global Clients practice, advising on the switch from Flint to Quinn. “We work with a broad range of the management team,” said Gilchrist.

“It’s now very hard for someone else to come in and take the strategy and execute it,” said John Cronin, U.K. financials analyst at Goodbody, the Dublin-based broker. “He has really stepped up and taken the job on, so the bet has to be on Quinn.”

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