After flirting with hiring the first outsider to lead the bank in its 155-year history, HSBC has told interim chief executive Noel Quinn that he can keep his job.
The appointment of Quinn, who has been with the lender since 1987, removes uncertainty over the bank’s leadership as it navigates a global economic downturn sparked by the coronavirus pandemic.
The worsening health crisis has prompted economists from Goldman Sachs, Morgan Stanley and S&P Global Ratings to forecast a worldwide recession this year.
“He’s done a very impressive job as interim CEO,” Mark Tucker, the HSBC chairman said on a conference call with journalists on Wednesday. “He was instrumental in the formulation of [the bank’s] new direction. He’s reorganised the senior leadership. He’s begun the reduction of costs. He’s injected a new pace and a new energy throughout the team. He brings a wealth of experience and exposure. He’s a decisive leader. He’s an excellent people leader. All of these elements of performance justify why we made the decision we did.”
The decision to name Quinn to the role permanently was approved unanimously by the company’s board of directors and came after regulators signed off on his appointment on Tuesday, said Tucker, the former chief executive of the Asian life insurer AIA Group, who became the first outsider to serve as HSBC's chairman in 2017.
In August, Quinn, 58, was named interim CEO, replacing John Flint, who was ousted after just 18 months in the top job.
HSBC’s shares rose 2.8 per cent to HK$46.20 in the morning trading session in Hong Kong on Wednesday.
Tucker said the lender, which is based in London but generates much of its revenue in Asia, needed to take a “different approach” as the bank faced a challenging and complex environment that included record-low interest rates and a weakening economy in Hong Kong.
Hong Kong, the bank’s biggest market, fell into a technical recession in the third quarter after months of anti-government street protests and pressure from an 18-month trade war between the United States and China. The city’s economy is expected to contract further this year after the coronavirus has sapped economic activity globally.
HSBC said in February that it expected about US$600 million of provisions for additional loan losses if the coronavirus outbreak drags into the second half of the year, but that was before conditions worsened in Europe and the US.
Globally, banks’ balance sheets are coming under pressure as businesses from airlines to oil companies struggle to pay their debts amid the economic slowdown.
“Are our circumstances more challenging than in mid-February? The answer is yes. They are more challenging in both economic and social factors,” Tucker said.
Before the global health crisis, HSBC and other lenders were already challenged by historically low-interest rates worldwide and those rates are expected to shrink further.
The US Federal Reserve cut interest rates to near zero on Sunday in an effort to stabilise financial markets and has announced a series of measures to ease pressure on short-term lending facilities. On Monday, the Hong Kong Monetary Authority to cut its base rate by 64 basis points to 0.86 per cent.
Since his appointment in August, Quinn has shaken up the company’s management team and announced that the bank would cut as many as 35,000 jobs and reduce annual costs by an additional US$4.5 billion as part of its third major reshaping in a decade.
As part of its strategy, HSBC is making a bigger bet on rising incomes in mainland China and Asia, particularly in the Greater Bay Area. Quinn has said that the bank would shift capital from underperforming businesses in Europe and the US to growth markets.
The bank plans to shrink its investment bank in Europe and the US and cut its American retail branch network by 30 per cent as part of the reshaping.
Tucker said in August that HSBC would take six months to a year to conduct a search for a new chief executive, but many investors had expected the bank would name a permanent CEO before its strategy update was announced last month.
As part of the search, HSBC reportedly approached Jamie Forese, the former head of Citigroup’s investment bank; Unicredit CEO Jean Pierre Mustier and Stephen Bird, the former CEO of Citi’s global consumer bank, as potential outside candidates. Forese will instead join the bank’s board on May 1.
Quinn was the only internal candidate and is the latest insider to lead the bank.
Tucker declined to say how many external candidates were vetted, but said the board interviewed a range of “high-calibre” candidates.
The appointment of Quinn comes as several other European banks have switched leaders this year.
Tidjane Thiam, the one-time head of British insurer Prudential, resigned as Credit Suisse’s CEO last month following a spying scandal at the bank and its Swiss rival UBS named Ralph Hamers, the ING CEO, as its new top executive in February.
British banking rival Royal Bank of Scotland named a new CEO in November and has changed its name to NatWest Group, while The Financial Times has reported that Barclays CEO James Staley, who is facing pressure over his links to disgraced financier Jeffrey Epstein, could step down at the bank’s annual meeting next year.
A supporter of the Aston Villa football club, Quinn joined the bank in 1987 via a subsidiary of Midland Bank, which was later acquired by HSBC in 1992. A graduate of Birmingham Polytechnic, he was regional head of commercial banking for Asia-Pacific from 2011 to 2015 and most recently head of the global commercial bank before he was named interim CEO.
After the appointment, Quinn said in a statement he would work with Tucker and the lender’s 230,000 employees “to reposition the bank for success in the future.”
As CEO, Quinn will receive a base salary of £1.27 million (US$1.53 million) and a fixed pay allowance of £1.7 million per year, plus a pension equal to 10 per cent of his base salary. He may get a bonus of up to 215 per cent of his salary, according to a stock exchange filing. The pay package is similar to that of his predecessor, Flint.
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