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Abu Dhabi, UAETuesday 25 September 2018

Yorkshire grit a quality of HSBC's new CEO to be

John Flint will not hesitate to reassign or fire personnel who do not fit his plans

John Flint has a reputation for not taking prisoners. James MacDonald/Bloomberg
John Flint has a reputation for not taking prisoners. James MacDonald/Bloomberg

A couple of months ago, HSBC Holdings broke with more than a century of tradition and tapped an outsider, Mark Tucker, as its chairman.

When it came to selecting a new chief executive, however, Europe’s biggest bank went with the ultimate insider.

On Thursday, the lender selected John Flint, the head of retail banking and wealth management, to succeed Stuart Gulliver as chief executive on February 21.

Born in Yorkshire, in northern England, Mr Flint attended elementary school for a time in Saudi Arabia when his father worked as a university lecturer in the kingdom. In an era when global banks are increasingly turning to new faces to manage their fortunes in an unforgiving marketplace, he represents something rare - a banker who has spent his entire 28-year career in the same institution, rising from a management trainee to the top job.

“John has worked in all our main markets, and he’s worked in many of the group’s key roles,” said Mr Tucker, 59, the former chairman and chief executive of the insurer AIA.

“His experience enables him to know better than anyone what HSBC is capable of.”

While Mr Flint, 49, may be a familiar face inside the walls of HSBC, he has cut a low profile outside the institution, according to Bloomberg. He does not maintain a LinkedIn page, nor does he tweet. The division he leads endured slumping income over the past four years and has been called a fintech laggard. And he lacks the prominence of his counterparts Jes Staley at Barclays or John Cryan at Deutsche Bank.

Yet Mr Flint, a buttoned-down banker with a sweep of greying hair and the analytical gaze of a numbers man, is intent on asserting his authority in all areas of the bank, especially the trading floor. He will not hesitate to reassign or fire personnel who do not fit his plans, according to a person familiar with his management style.

A fan of endurance sports, he once finished Switzerland’s Ironman race, a punishing three-part competition that includes a full marathon on top of a 14km bike ride and a 5km swim. a,though too busy to compete these days, he still runs shorter distances and does open-water swims to unwind. Mr Flint declined to be interviewed.

Returning from Saudi Arabia, he went on to earn an economics degree with honours from Portsmouth Polytechnic, a small college in Britain’s maritime hub. He had wanted to be a banker since he was 15, and applied to HSBC’s International Manager Programme on the advice of his high school headmaster, according to a company biography.

He has been rising through the ranks at HSBC since he joined the bank in 1989, at the age of 21. As a trainee, Mr Flint was steeped in the 152-year-old institution’s ways. The boot camp sends budding executives on two-year tours in HSBC’s operations around the world. Recruits are expected to learn the native language and to “demonstrate the ability to make an immediate impact” on business. Mr Flint completed his stint in Hong Kong and Calcutta.

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After labouring at various roles in Hong Kong, Bangkok, and Singapore, Mr Flint was made the head of global markets in Indonesia. By 2004, he was running balance sheet management for Europe, the Middle East and Africa, and two years later became the group treasurer. He then managed the global asset management unit and in 2013 assumed his current role.

Under his watch, pretax profits at the retail banking and wealth management division slumped almost 20 per cent between 2013 and 2016, to US$5.3 billion, as the company closed and sold businesses against a backdrop of falling interest rates. More recently, his overhaul has shown signs of bearing fruit. Earnings at the unit jumped 36 per cent in the first half of 2017, to $3.4bn, from the same period in 2016.

Mr Flint’s rotations through HSBC’s businesses served him well. When the board started the search for a successor to Mr Gulliver, Mr Flint placed his knowledge of the bank’s culture at the centre of his pitch to the new chairman.

Investors were not surprised that HSBC, which has never appointed an outsider to the chief executive spot, tapped him to pick up where his predecessor left off. Under Mr Gulliver, who took the helm in 2011, and the chairman Douglas Flint (no relation), HSBC withdrew from 18 countries and about 100 businesses after the global financial crisis, tougher capital requirements and stiffer regulation prompted an industry-wide retrenchment.

HSBC’s share price has climbed 68 per cent over the past five years, compared with a 23 per cent gain in the 46-company STOXX 600 Banks Index.

"Stuart and Douglas did a good job tidying up," said Hugh Young, the head of Asia at Standard Life Aberdeen, which holds HSBC shares. "Continuing their work makes a lot of sense, so we’re supportive of having an outsider appointed as chairman, and an insider as CEO."

Now that much of the restructuring is done, Mr Flint must take charge of one of the most influential banking giants in the world, with $2.5 trillion in assets. It is also one of the most idiosyncratic. Founded in 19th century Hong Kong, HSBC has deep roots in two home markets on either side of the globe: the UK and China. For all its international scope, HSBC has cultivated an insular culture that prizes a go-slow approach over the racy financial engineering that has driven many of its rivals. It is little wonder that the bank has opted over the decades to choose chief executives from its own ranks.

Mr Flint, who was a senior executive at a time when HSBC was fined in scandals ranging from market rigging to money laundering, will have to ensure the bank’s reputation does not sustain further damaged from similar misconduct.

On Wednesday, HSBC, along with Citigroup and Deutsche Bank agreed to pay a combined $132 million to settle a US class action brought by futures traders accusing them of manipulating the Libor benchmark interest rate, Reuters reported a US court filing as saying.

Citi, Deutsche Bank and HSBC agreed to pay $33.4m, $80m and $18.5m, respectively, according to the filing in Manhattan federal court.

Another potential source of trouble is the former HSBC currency trader and the bank’s former global head of foreign exchange, Mark Johnson's ongoing court case.

On Thursday, Mr Johnson sought to distance himself from a $3.5bn foreign-exchange transaction at the centre of a US fraud case, saying he left his London colleague Stuart Scott in charge of the deal.

Mr Johnson’s testimony came on his second day on the witness stand in a case where he and Mr Scott are accused of trading ahead of a customer order in 2011. Mr Scott remains in London where he is fighting extradition to the US.

"I put Stuart in charge of a deal at this stage," said Mr Johnson, who was in HSBC’s New York offices on December 7, 2011, when the order was executed primarily by traders in London. “Stuart was there, as opposed to being 3,000 miles away."

Mr Johnson is also accused of tipping off bank currency traders to buy, according to Bloomberg. That caused the client, Cairn Energy, to overpay and resulted in an $8 million profit for the bank, prosecutors say. On Thursday, Mr Johnson denied knowing many of the details of the transaction for which HSBC was hired to convert the proceeds of a Cairn unit sale into pounds from dollars.

When it comes to financial technology, Mr Flint will have a lot of work to do to catch rivals such as Barclays, UBS or Banco Santander, which have invested aggressively in fintech start-ups and apps to bring digital banking services to their retail customers and wealth management clients. In September, Autonomous Research in London criticised HSBC’s mobile banking app and called the lender a “laggard” in innovation.

“The bank is well positioned for the future but we must continue to innovate and accelerate the pace of change required to meet the expectations of our shareholders, customers, employees, and society at large,” the new chief executive has said.

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