John Flint's abrupt departure from HSBC leaves a worrying gap at the top. The veteran banker has parted company with the Asia-focused lender after a mere 18 months at the helm, with little explanation. Given mounting uncertainty in key markets, it's a poor time to be adding more.
HSBC investors had some reason to cheer on Monday: the bank's first-half pre-tax profit rose almost 16%, to a forecast-beating $12.4 billion. Revenue expanded nearly 8% year-on-year, while expenses dipped, on the same reported basis; annualised return on tangible equity crossed the bank's 11% target, coming in at 11.2%. Even better, the group announced it would buy back up to $1 billion of shares, adding to the more than $6 billion purchased since 2016.
Unfortunately, for now, there is far more to fret about than celebrate. The unplanned departure of a chief executive is rarely good news at a $160-billion institution, and even more so here: Flint was a known quantity, who was picked for the top job after three decades with the bank. It suggests tensions in the boardroom and with the bank's pugnacious chairman, Mark Tucker.
HSBC, which appointed commercial banking boss Noel Quinn as interim CEO, said in a terse statement that the mutually agreed departure was down to a complex and challenging global environment. Banks like HSBC and rival Standard Chartered, with emerging market leanings, suffer when geopolitical storms hit. It's unclear, though, that a new arrival has greater control over external forces.
None of this makes the timing better, either. Over the coming months, the bank, a big lender to U.K. businesses, will have to weather worsening consumer sentiment as Britain crashes out of the European Union. A bruising trade war between China and the United States will hurt many emerging economies and the Middle Kingdom itself.
Worst of all, Hong Kong. The announcement on Monday comes on a day when the city, already battle-weary after weeks of protests, is at an unprecedented standstill due to strikes. HSBC's retail business holds billions of dollars in deposits in the former British territory, and has a leading position in mortgages: both may suffer if instability worsens. The local market was down 3% on Monday. Digital banks are adding to competition here too. Flint's replacement will need a hard hat.
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