HSBC picks John Flint for CEO hotseat

(Adds investor comment, details on Flint, HSBC performance)

By Steve Slater

LONDON, Oct (Shenzhen: 000069.SZ - news) 12 (IFR) - HSBC Holdings (Frankfurt: 923893 - news) has picked John Flint, who has run its retail and wealth management business for almost five years, to replace Stuart Gulliver as chief executive in February.

Gulliver had already announced his intention to step down during 2018, and Flint was widely tipped to be his replacement.

HSBC said Flint will take over on February 21. It will mean there are two new men at the top of Europe's biggest bank, after Mark Tucker joined as chairman in October.

Flint, 49, is seen as a safe pair of hands who has a relatively low profile but deep experience in most areas of HSBC, including crucially in Asia and in the investment bank.

"This is the right decision," said Hugh Young, head of Asia at Aberdeen Standard Investments, which owns 1.7% of HSBC shares. "The current chief executive has worked hard to turn the bank around and set it up for the next CEO to take it forward into a stronger growth phase and continue the ongoing tilt towards Asia."

Flint acknowledged he needs to build on Gulliver's attempt to simplify the bank and improve its profitability. "The bank is very 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," Flint said in a statement.

Gulliver has been CEO since 2011 and sold dozens of businesses, put more emphasis on Asia and tried to cut costs and improve compliance in an effort to lift performance. But the bank's returns remain below target and there are concerns about lacklustre revenue growth.

Flint has been with HSBC for 28 years and run its retail banking and wealth management business - the bank's largest division - since the start of 2013.

He is no relation to Douglas Flint, who stepped down as chairman at the end of September.

Analysts said an internal choice for CEO was expected after Tucker was picked as chairman, the first outside appointment in the bank's 152-year history.

Aberdeen's Young said picking an insider as CEO will make the transition to new leadership smoother and help keep HSBC’s strong culture intact. And Flint will be aware of the complexity of managing HSBC.

OLD SCHOOL

Flint decided he wanted to be a banker at the age of 15 and his school headmaster put him in touch with the head of HSBC in Indonesia, who recommended he get a degree and apply for the bank's international management programme, according to a memo sent to HSBC staff on Thursday.

He was accepted on the programme in October 1989 after studying economics at Portsmouth Polytechnic. He completed his training in Hong Kong and Calcutta and had early assignments in Hong Kong, New York and Bahrain.

Flint, a keen swimmer and triathlete, has also worked for the bank in Vietnam, Singapore, Indonesia, Thailand, the US and the UK. He spent his first 14 years in Asia in the investment bank's global markets business, including as head of regional derivatives trading.

"I was in Indonesia when the Asian financial crisis started in 1997. Indonesia was hit very hard. I was operating in a banking system that endured extreme stress and it was a powerful learning experience," he recalled in the staff memo.

He moved back to back to Europe in 2004 and two years later he was appointed group treasurer, responsible for balance sheet management. In 2008 he added the roles of deputy head of global markets and head of global markets for Europe, Middle East and Africa.

In 2010 Flint was named head of asset management, where he reset strategy for the business. At the start of 2011 he became chief of staff to the CEO and head of strategy and planning.

Two years later he took on running retail banking and wealth management, which had revenues of US$18.9bn last year, or 38% of the group. He spent much of his time spent grappling with conduct issues and rolling out new technology.

Compliance and technology will be among Flint's biggest challenges as group CEO, as well as trying to get return on equity above 10% and increasing revenues. ROE was just 0.8% last year, or 7.7% on an adjusted basis, and revenues fell 2% on an adjusted basis from 2015. (Reporting by Steve Slater)