UNICREDIT SPA’S Jean Pierre Mustier pulled out of the race to become chief executive officer of HSBC Holdings Plc, a rejection that adds to uncertainty at the top of Europe’s largest lender and extends the search for a new boss into its seventh month.
Mustier, who led a turnaround at the Milan-based bank over the last four years, plans to stay and is committed to the new strategic plan announced in December, according to a UniCredit statement on Monday. The Frenchman informed HSBC Chairman Mark Tucker of his decision to withdraw from contention on Sunday, the Financial Times reported.
Mustier’s move further complicates an already drawn-out search at HSBC after the bank said it will cut 35,000 jobs over the next three years and canceled share buyback plans as part of its third major overhaul in a decade under interim CEO Noel Quinn. The uncertainty has raised questions about who will execute the plan, which met with investor skepticism after it was announced.
Mr. Mustier had emerged as a key external contender for the role, pitting him against HSBC lifer Mr. Quinn, the only internal candidate under consideration. Mr. Mustier’s rejection further drags out the search, which the bank has said could run as late as August, some 12 months after Mr. Quinn was installed as interim leader following the ouster of John Flint.
UniCredit shares have fallen since Bloomberg first reported HSBC’s interest in Mr. Mustier on Thursday, while the lack of clarity at the top is also weighing on HSBC’s shares. They’ve fallen for five straight sessions last week, and have dropped 7% this year in Hong Kong. The stock traded little changed Monday.
“The bank’s situation remains tough,” said Alex Wong, Hong-Kong based director of asset management at Ample Capital Ltd. “It’s not easy to ask another CEO to join you as they are already performing in their current position.”
At UniCredit, Mr. Mustier has been cutting costs and accelerating the cleanup of the balance sheet, focusing on further simplifying the bank’s structure and improving the way it allocates capital. Since 2014, UniCredit has cut about 20,000 jobs, 14,000 of which took place during Mr. Mustier’s tenure. He also oversaw a €13-billion rights offer in 2017 to help pay for a massive clean up of bad loans. Under the new strategic plan he expects to cut 8,000 jobs in total.
Those efforts are starting to bear fruit for shareholders, with UniCredit promising to reward investors with €2 billion ($2.2 billion) of share buybacks, its first in at least 14 years, as part of the new plan.
Officials for HSBC declined to comment.
At HSBC, the risks have been rising. The bank is going through the third strategic overhaul in a decade. Mr. Tucker, who ejected Mr. Flint last year after he failed to revive growth at the Asia-focused lender, has struggled to explain why a bank with such a stronghold in some of the world’s fastest-growing economies has been unable to produce a better return.
Mr. Quinn announced plans last week to cut thousands of jobs at the London-based bank and has shuffled some management positions. HSBC intends to slash costs and staff at under-performing units in the US and Europe, while doubling down on Asia — a more profitable region, but one that is roiled with geopolitical tensions and the outbreak of the coronavirus.
“It’s not a good time to join the bank, especially for an external candidate,” Ronald Wan, CEO at Partners Capital International Ltd. in Hong Kong, said by phone. “HSBC is going through a challenging operating environment — economic slowdown, the coronavirus outbreak, Brexit and the bank’s new strategy will all make the CEO’s job difficult.” — Bloomberg