In a surprise move, HSBC CEO Noel Quinn has decided to step down after almost five years, prompting a search for a successor, the company announced Tuesday.
Quinn has guided the U.K.-based lender through a sweeping overhaul to record profits and the strongest returns in more than a decade. He was instrumental in selling the bank’s Canada and Argentina operations and has built a strong position on sustainability, the company said.
“After an intense five years, it is now the right time for me to get a better balance between my personal and business life. I intend to pursue a portfolio career going forward,” Quinn said in a statement released by the bank Tuesday.
The board has started a formal process to find a successor and will consider internal and external candidates. Quinn will continue as the group chief executive through the process, ensuring a smooth transition, the statement noted.
“The Board would like to pay tribute to Noel’s leadership of the company,” HSBC Chairman Mark Tucker said in a statement Tuesday. “He has driven both our transformation strategy and created a simpler, more focused business that delivers higher returns. The bank is in a strong position as it enters the next phase of development and growth.”
Quinn joined HSBC in 1987 through Forward Trust Group, a subsidiary of Midland Bank, which was bought by HSBC five years later. He became HSBC’s interim CEO in 2019 when his predecessor, John Flint, exited the bank. Quinn was named CEO the following year.
“I never imagined when I started 37 years ago that I would have the honour of becoming Group Chief Executive of this great bank,” Quinn said in a statement.
Since Quinn took over at the COVID-19 pandemic’s onset in March 2020, HSBC’s stock price has risen 35%, Bloomberg noted. Its shares listed in Hong Kong closed at 2.2% higher on Tuesday while those listed in London were trading 3.6% up by late morning, according to the Financial Times.
‘Natural inflection point’
During his tenure, Quinn oversaw an extensive restructuring process. In 2020, HSBC announced a plan to cut 35,000 jobs and $100 billion in assets over the next three years, scale back its presence in the U.S. and mainland Europe, and reduce the size of its investment bank while investing more in its Asia and Middle East operations.
HSBC, particularly under Quinn, has walked a tightrope in dealing with its largest shareholder, the Chinese insurance giant Ping An. HSBC sold its Canada unit to Royal Bank of Canada in a proposed C$13.5 billion ($10 billion) deal in December — in line with Ping An’s request that HSBC split its Western and Asian operations.
However, Ping An’s multi-year campaign to get HSBC to spin off its Asia business to boost its dividend failed at the bank’s annual investor meeting in England last year.
Earlier this month, HSBC announced its plan to sell its Argentina operations worth $550 million to Grupo Financiero Galicia, the largest private financial group in Argentina. The deal, which is expected to be completed within the next 12 months, might see a $1 billion pre-tax loss on disposal in the first quarter and significantly impact the group’s common equity tier 1 ratio by closing, the bank said.
Quinn called the transaction “another important step in the execution of our strategy,” enabling the bank to focus on higher-value opportunities across its international network.
Last year, the bank exited the French market. In February, HSBC received approval to sell its Russian unit to Expobank.
“It's also a natural inflection point for the bank, as it comes to the end of the current transformation phase. It's an ideal time to bring in leadership to move the bank forward over the next five years,” Quinn told reporters in a conference call, according to Reuters.
Quinn began thinking seriously about leaving his job during the Christmas break in December, and spoke to Tucker in recent weeks about his intentions to step down, Bloomberg reported. Tucker plans to conclude the CEO search by the second half this year.
Quinn, who got a “good leaver” status, will still be entitled to his deferred awards, which will continue to vest, according to the wire service. However, the status has a condition attached to it — he cannot accept an offer from a defined list of competitors after his retirement, HSBC said in a statement to the publication.
“We never felt he looked completely comfortable in the role and suspect that Covid was a particularly brutal period running an international business like HSBC,” Perlie Mong, an analyst at Keefe, Bruyette & Woods, said in a note to clients, according to Bloomberg. But his exit is “surprising after only four years in the role, particularly as it took 7 months as ‘interim’ to actually get the job,” she added.
Prospective candidates
2022’s promotion of Georges Elhedery, formerly the head of the markets division, to CFO was a strategic move aligned with the bank's long-term succession plans, Quinn said then.
Quinn aimed “to make sure there are no less than three and ideally four to five potential succession options that the board could consider within HSBC,” he told Bloomberg at the time.
Some staff view the bank’s global head for wealth and personal banking, Nuno Matos, as a potential replacement, a senior executive at the bank told Reuters on the condition of anonymity.
Tucker declined to comment on potential CEO candidates to the publications.
