Yen Nee Lee
Jason Alden | Bloomberg | Getty Images
The job cuts will be targeted at senior roles and is expected shave up to 4% of the bank’s wage costs, HSBC Group Chief Financial Officer Ewen Stevenson told the Journal in an interview. The cuts would come from a combination of layoffs and attrition.
“Up to 2% of the bank’s 237,685 employees could lose their jobs,” the Journal reported on Monday, after HSBC said Flint will step down as CEO on Monday, after 18 months on the job.
In a statement, HSBC Chairman Mark Tucker said of Flint’s exit: “In the increasingly complex and challenging global environment in which the Bank operates, the Board believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us.”
Reuters, citing a person familiar with the matter, reported differences between Flint and Tucker over the pace and results of executing HSBC’s strategy. Those differences stemmed from Flint’s softer approach to cutting costs and setting revenue targets for senior managers to boost profit growth, according to the Reuters report.
During a conference call with investors and analysts on Monday, Tucker reiterated that there was “no disagreement on strategy.”
“I think the element where we have work to do is how we go about realizing those priorities,” he added.
Another sticking point was related to turning around the bank’s U.S. business, reported Reuters.
In the conference call with investors and analysts, Stevenson said the turnaround in the bank’s U.S. business is “not on track.” He added the lender is not expected to achieve its target of 6% return on tangible equity by 2020 given the challenging environment.
Tucker said the bank has no fixed timeline to appoint a new CEO, but the search could take six to 12 months. The bank will consider both internal and external candidates, he added.
Flint, who took over as CEO in February 2018, started his career at HSBC in 1989 and worked across most of the bank’s business units. He set out plans to invest $15 billion to $17 billion over three years in areas including technology and China.
His surprise departure will leave investors wondering whether there will be any change in the bank’s strategy, said Joshua Crabb, senior portfolio manager at asset management firm Robeco.
“When you get a change of this magnitude, people are going to be looking for what are the reasons, what should be expected if there’s any change in strategy,” Crabb told CNBC’s “Squawk Box” before Tucker’s conference call with investors and analysts.
Other financial metrics that analysts and investors were watching:
- Net interest margin, a measure of lending profitability, was 1.61% — lower than the 1.66% in June 2018.
- Earnings per share was $0.42, an increase from $0.36 a year ago.
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.
“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.
HSBC is headquartered in London but derives much of its revenue in Asia, particularly in Greater China.
— Reuters contributed to this report.