Anyone still trying to figure out why John Flint got the bullet at HSBC, look no further. Today’s numbers from the megabank were, as his temporary replacement Noel Quinn puts it “not acceptable”.
At a time when Lloyds is expecting returns on equity of 14%-15% next year, HSBC admits it won’t even be able to make 11%. Lest we forget, not so long ago Lloyds was nearly bust.
For HSBC, proud it didn’t need a state bailout in the financial crisis, this is a humiliating state of affairs. Not only can it no longer make the returns it promised, but its profits and sales today fell massively short.
And the killer fact? The strife on the streets of Hong Kong can’t be blamed. The worst problems are in the UK and Europe.
Quinn hopes in part to cut his way to recovery. A widely expected cull of 10,000 staff will be just the start.
But while cuts may boost margins, it’s far harder to improve revenues.
For that, Quinn has to make HSBC offer better, faster service. Some clients complain of how difficult it is to get decisions from managers there, and how process-bound the place seems to be.
That chimes with what some insiders say: approval from a “top-level manager” is needed just to order drinking water in your meeting room.
If Quinn’s cuts are done properly, they may help; fewer layers of bosses could reduce the internal red tape. But if not, they will simply demotivate staff and make service worse.
His insider credentials should help sustain morale during the process. But if he doesn’t deliver fast enough, chairman Mark Tucker will look outside for a tough guy to replace him.
Lloyds chief Antonio Horta-Osorio’s CV looks more appealing by the day.
