HSBC AGM: Douglas Flint talks pay, Panama, Brexit and his exit own (Flexit?) as he confirms the hunt for his successor is on
HSBC's chairman Douglas Flint has admitted he is "not content" with the 23 per cent drop in the bank's share price this year – but has passed the blame onto the wider market.
The banking boss, who this morning confirmed the hunt for his successor is on but confirmed he would remain as long as necessary, claimed jitters about financial firms had affected the bank's share price.
Flint has also confirmed that the bank will be overhauling its system of executive pay.
Read more: HSBC's executive pay easily passed by shareholders
The move will be widely seen as an effort to bolster support for the bank's executive pay, as shareholders are set to vote on whether chief executive Stuart Gulliver deserves his £7.3m pay packet.
Flint took the opportunity to address a number of key issues facing HSBC this year – including executive pay, the Panama Papers and Brexit.
Here are the key takeaways…
HSBC's falling share price
Flint blamed many external factors for the slide in its share price, noting that just six of the 29 "globally significant" banks were trading above their book value, saying the average discount-to-book was 25 per cent.
In the UK, he claimed, banks excluding HSBC were trading at a discount of almost 50 per cent.
"Clearly [it's] a difficult time," he said to investors this morning. "A time to reshape and build, focusing on our core strengths and our opportunities for growth – which is what we have been doing during this period of lower economic activity.
"And we have been looking to the longer term, a perspective which I believe is critical to HSBC's future."
HSBC's succession planning
Speaking of the future, Flint confirmed that the bank's nomination committee is formulating a succession plan for his role.
The chairman confirmed he is planning to step down during 2017. The exact timing is "clearly dependent upon identifying and securing the appropriate candidate", Flint said, adding he would "remain as long as necessary to ensure a smooth transition".
Executive pay
HSBC is proposing to reduce the amount of cash given to executive directors from 50 per cent to 30 per cent of their base salary, and make long-term incentives subject to a three year forward-looking performance period.
The new policy will lower the maximum amount its executive directors could earn by seven per cent, Flint said.
"We had expected that the remuneration policy you approved back in 2014 would not need to be refreshed until it expired next year."
Now we await the shareholder vote on Gulliver's pay package…
Panama Papers
Of reforms to the bank's standards, Flint said there was "no question that we have made significant progress, and, as a result, we are much stronger today", but acknowledged it was still a work in progress.
"The so-called Panama Papers have highlighted once again how perfectly legal corporate structures can be abused to facilitate money laundering and tax evasion or to obscure ill-gotten gains," he said.
"While there are lessons to be learned from the revelations, the circumstances alleged in the Panama Papers with regard to HSBC are largely historical, in some cases dating back 20 years, and so predate the tough financial crime, regulatory compliance and tax transparency standards which HSBC has put in place in recent years," he added.
"We are taking steps to align our customer base with these higher standards relinquishing clients unable or unwilling to furnish full transparency of their affairs. We are committed to working with the relevant public authorities to fight financial crime and keep criminals out of the financial system."
Brexit
Flint has reaffirmed HSBC's belief that the UK would be better within a reformed EU than outside the union.
"We believe that the UK would enter a period of great economic uncertainty in the event of a vote to leave and should the UK economy slow and economic conditions deteriorate as our research suggests, in at least the short to medium term, this would affect many of our customers in the UK and the economic environment we operate in," he said. "This is likely to have a negative impact on HSBC."