• by Thom Forbes  @tforbes, August 5, 2019

After only 18 months in the job, John Flint has been dismissed as CEO of HSBC, the London-based bank with nearly 250 branches in the U.S. and operations in 65 countries and territories. It is also preparing to slash thousand of jobs worldwide.

Reuters’ Sumeet Chatterjee and Lawrence White call the 51-year-old Flint’s ouster “a shock move the chairman of Europe’s biggest bank said was needed to speed up progress on priority areas such as the turnaround of its U.S. business.”

“It’s the right time for change, and doing it clearly and decisively from a position of strength is very important,” chairman Mark Tucker tells  them.

“The CEO’s exit was a result of differences of opinion with [Tucker] over Flint’s more tentative approach to cutting expenses and setting revenue targets for senior managers to boost profit growth, a person familiar with the matter said,” Chatterjee and White write.

Part of that boost apparently involves paring the senior manager payroll.

“Up to 2% of the bank’s 237,685 employees could lose their jobs … as HSBC flagged a worsening outlook for the global economy in its second-quarter results,” Margot Patrick reports  for The Wall Street Journal.

“Finance director Ewen Stevenson in an interview said the job cuts, which will be targeted at senior roles, would shave up to 4% off HSBC’s wage costs and would come from a mix of layoffs and attrition as people leave for other jobs. HSBC said severance costs this year would be $650 million to $700 million, and save it that much annually going forward,” Patrick writes.

In addition, “Stevenson laid bare the troubles in the bank’s U.S. division,” Emily Hardy writes  for This Is Money. 

“He told investors: ‘We're not on track with the turnaround of our U.S. business.… The current returns on the U.S. business is not acceptable,’” Hardy reports.

“Trade tensions between the U.S. and China are progressively affecting the growth output in both markets,” Stevenson added.   

As the bank searches for a CEO from outside its ranks, “Flint will be replaced on an interim basis by Noel Quinn, who has headed global commercial banking since December 2015. Quinn, 57, previously served as regional head of commercial banking for Asia-Pacific in Hong Kong,” Chad Bray and Enoch Yiu write  for the South China Morning Post.

“In the increasingly complex and challenging global environment in which the bank operates, the board agrees that a change is needed -- and John [Flint] agrees -- to make the most of the significant opportunities ahead of us,” Tucker said on a conference call, they report. “This is a decision about the future,” Tucker added.

Speaking of which, like everyone else “HSBC faces a growing list of negative headwinds, including falling interest rates, which crimp lending revenue, and geopolitical uncertainty in top markets. The consequences of Brexit, for example, ‘remain highly uncertain,’ the bank said,” Sherisse Pham and Julia Horowitz write  for CNN Business.

“The bank, which made almost 90% of its profits in Asia last year, also sits in the middle of the escalating trade war between the United States and China. Political unrest in Hong Kong poses a risk, too. … Tucker declined to say whether there’s concern that HSBC could be added to a blacklist of foreign companies China is drawing up, but said they're ‘confident’ in their China business and ‘look forward to continuing to support China's growth and economic prosperity,’” Pham and Horowitz add.

For all the troubling news, “the lender said  profit before tax rose 15.8% year-on-year to $12.4 billion in the first six months of 2019, while revenue for the same period was 7.6% higher than the year before at $29.3 billion,” CNBC’s Yen Nee Lee reports.

“Ronald Wan, non-executive chairman of financial services firm Partners Financials Holdings, said HSBC’s latest set of results was ‘really good.’ Still, investors should be cautious before buying the stock, he said,” Lee continues.

“We need to watch what will be happening in Hong Kong and what will be happening in Britain with Brexit (which) will have an impact on the bank’s corporate earnings in the second half of this year,” Wan told CNBC’s “Street Signs” on Monday.