Beijing twist as HSBC boss calls it quits

Editorial | Mary Ma 6 Aug 2019

John Flint was known as a safe pair of hands when he was named to take over from Stuart Gulliver as HSBC's taipan last year.

Now Flint is stepping down from the post as a "good leaver" after a stint of only 18 months.

It's sensitive to change the chief executive at a time so close to Brexit that is doomed to happen after Brexit hardliner Boris Johnson's succession to Britain's premiership.

Immediately, the rumor mill went into overdrive, with suggestions that Flint's resignation was sparked by disagreement with chairman Mark Tucker. A report dispatched by BBC carried it further, saying Tucker may want to have his own man on the job.

That's probable. But it could also be just a smokescreen, as other reasons for which Flint had to go - despite reporting a double-digit growth in pre-tax profit for the six months ended June 30 - may have to do with China's imminent release of a so-called "unreliable entity" blacklist.

As for HSBC investors, a recent Global Times' report couldn't be scarier. On August 2, the state-owned newspaper ran a story headlined "HSBC feels the heat on Huawei CFO case as China draws up unreliable entity list."

The Communist party mouthpiece quoted a source accusing the London-based banking giant of acting unethically in the way it had helped US investigators in their probe that led to the arrest of Huawei chief financial officer, Sabrina Meng Wanzhou.

Although the report stopped short of citing any officials or sources to confirm whether HSBC would be among the first group of foreign companies to be included in the blacklist, the message in the headline was explicit.

It was Global Times' second report in a week that named HSBC. On July 26, it reported FedEx, Flex and HSBC would likely be the first to be blacklisted.

HSBC derives a substantial portion of its income from the Asia-Pacific region, including Hong Kong and the mainland. If it's going to included in the "unreliable entity list," the impact on the group would be significant. The rhetoric showed that lobbying efforts by top HSBC executives, first revealed by the Financial Times in June, has failed to win sympathy in Beijing.

According to the FT, HSBC executives - including Flint - had told Chinese officials that the bank had no choice but to cooperate with US investigators to hand over documents leading to Meng's arrest.

The Huawei CFO is currently free on bail in Vancouver, fighting extradition to the United States to face charges of allegedly breaching sanctions on Iran.

HSBC said Flint will immediately cease his day-to-day responsibilities at the bank, with group managing director Noel Quinn taking over as interim chief executive with immediate effect.

Could Flint be just a sacrificial lamb? Will HSBC still appear on the blacklist of unreliable entities, that is being drawn up by Beijing to sanction companies accused of acting against China's interest, following Flint's resignation?

It made sense to time the announcement of Flint's departure with the release of a solid report for the first half, to reduce the impact of such a surprise development.

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