A dinner discussion with Douglas Flint
Held on Monday, January 9, 2017
With support from Eversheds LLP
Douglas Flint (Group Chairman, HSBC Holdings)
These are challenging days in which to run a bank – especially one of the few truly ‘global’ banks.
The 2007/08 financial crisis has taken its toll. Armed with Basel 2/3/4, Dodd-Frank, CRD IV, Volcker, Vickers and Liikanen, global and domestic regulators have imposed ring-fences, have hived off proptrading and have jacked up capital requirements to levels that would have been unthinkable in pre-crisis days. And then there are the fines – often running into the hundreds of millions of dollars (or more), in cases where management was more unknowing than negligent.
Plus, there is technology – which (to hear technologists tell it) will, if it hasn’t already done so, undermine the conventional banking model with low-cost internet/cloud-based technology, big data and free coffee for all.
On top of that, there has been the unprecedented global spectacle of central banks driving interest rates down close to (or even below) zero – thereby undermining the conventional economics of retail banking. And, of course, ‘Brexit’ – which (if one believes the FT) will drive major financial groups out of London (and perhaps out of Europe), leaving the City shuttered and empty.
And yet… One of the little mysteries of the last couple of quarters (to me, at least) is that the US banking sector turned in record profits, while financials have been a major driver of the equity boom that, at the time this is being written, we are still enjoying. And, of course, anyone can count the cranes at work in both the City of London and Docklands; no sign of Armageddon yet. Explain that, if you can…
If anyone can explain it – and paint a convincing picture of how big banks are going to react to the challenges they face – it has to be Douglas Flint, who has been Group Chairman of HSBC since 2010. (And, I should add, a very successful Chairman, having seen HSBC outperform all its large European rivals this year, with its stock price up over 20%.)
Douglas was educated in Scotland, became a partner with Peat Marwick in 1988, and joined HSBC in 1995 as Group Finance Director. He is a former Chairman of the IIF, a member of the Group of 30, Chairman of The Hong Kong Association and was appointed a UK Business Ambassador in 2014. In other words, he is a Very Big Cheese in global financial circles.
I am, therefore, delighted (and privileged) that he has agreed to speak – under the Chatham House rule – on the global financial scene. I am also delighted that our friends at Eversheds have agreed to host the dinner – which is a wonderful opportunity to look at the future for UK and international banks.