HSBC CEO John Flint steps down from bank after just 18 months

HSBC boss John Flint has fallen victim to a top-level reshuffle at the bank despite racking up a 16 per cent rise in first half profits.

The firm said this morning it needed a change at the helm to deal with a “challenging global environment”. Flint, who has been chief executive for around a year-and-a-half, is stepping down “by mutual agreement”.

Reporting first half results this morning, HSBC said pre-tax profits rose to $12.4bn (£10.2bn), 16 per cent up from $10.7bn this time last year.

Revenue was $29.4bn, an eight per cent rise, while earnings-per-share increased to 42 cents.

The bank reported investments of $2.2bn in the first half of the year, up 17 per cent year-on-year, on “near and medium-term initiatives to grow the business and enhance digital capabilities”.

London-headquartered HSBC, which makes more than 80 per cent of its profit in Asia, said that its global commercial banking unit head Noel Quinn will be interim chief executive. The board would consider internal and external candidates for the new CEO, it said.

Chairman Mark Tucker is said to have disagreed with former CEO Flint on how fast the bank should have met profit targets.

Analysts predicted that Europe’s biggest bank would slow down in the second quarter, but after pre-tax profits of $6.2bn in the first three months of the year it has remained largely stable on profit.

However, in its lacklustre US division, it said it was unlikely to meet its six per cent return on average tangible equity (RoTE) target by 2020. This was in part because of falling interest rates in the US, and “geopolitical issues” which “could impact a significant number of our major markets”.

The bank also pointed to Brexit, saying the impact of the UK’s exit from the EU remained “highly uncertain”.

Tucker thanked Flint for his “commitment” and “dedication”. He said: “In the increasingly complex and challenging global environment in which the bank operates, the board believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us.”

Chief financial officer Ewen Stevenson said this morning the bank was “not on track” with the turnaround of its US business. “The US revenue outlook has become more challenged in recent months.”

“We recognise the current returns in the US are not acceptable,” he added.

“We’re actively managing costs and investment growth in order to respond to a more challenged revenue outlook,” said Stevenson.

Flint said: “I have agreed with the board that today’s good interim results indicate that this is the right time for change, both for me and the bank.”

Starling Bank partners with SumUp to give customers faster payouts

Starling Bank has partnered with SumUp, Europe’s leading mobile point of sale company, to provide small merchants with access to faster settlements.

With its card terminals relied upon by over 1.5m users globally, SumUp is helping small business merchants by delivering access to affordable and easy-to-use payment devices. Their terminals can be used with an accompanying app and, crucially, without an app, via their standalone 3G Reader solution which comes with an integrated free data card.

Starling’s Banking Services business provides fintechs, such as SumUp, with access to key payment schemes and a full bank offering all through a simple API.

While SumUp enables merchants to accept card payments in seconds with just an easy-to-use device in hand, traditional banking providers and existing card rails means the process of settlement for small businesses currently requires a waiting time of two to four days for payments to clear through. By using Starling Banking Services, SumUp can now ensure their UK merchants will soon receive payments on the next business day and do not need to wait days to see the money their customers have paid them for their products and services.

Starling’s Banking Services continues to grow with this new partnership, serving disruptive and innovative payments businesses across the fintech ecosystem. Existing clients include the Department for Work and Pensions, the savings and investment marketplace Raisin UK and fintechs Currency Cloud, Pockit, PelicanPay and Vitesse.

Helen Bierton, Head of Banking at Starling Bank said, “Small businesses are the lifeblood of an innovative and entrepreneurial ecosystem, so making sure they can receive the rewards of their hard work is incredibly important. Our partnership with SumUp means that whether a small merchant is serving coffee or cutting hair, we are helping to ensure they get paid as quickly as possible so they can get on with growing their businesses.”

Dimitri Gugunava, VP Banking and Acquiring at SumUp said, “We always look for new ways to improve the services we offer our 1.5m merchants worldwide on a journey of empowering them to succeed while doing what they love. Quicker payouts is an important step which we were able to take through our partnership with Starling Bank.”

Starling was the first challenger bank to be a direct member of the Faster Payments Service and the only banking provider of real-time access to Faster Payments through APIs in the transaction banking world. Starling’s pioneering Banking Services platform enables businesses, including Payment Service Providers, retailers, corporations and fintechs to develop and scale new products and to move money in seconds.

Through their simple APIs, this can be done quickly and efficiently without the need for long development lead-times and complex legal arrangements. Starling customers can pick and choose individual components, or product features, to revolutionise how they make payments and innovate new products for their customers.

Metro Bank plans £500m sale of loan book to private equity firm

Metro Bank is beefing up its senior management and preparing to sell a £500 million portfolio of mortgages to restore confidence among investors.

The struggling lender is set to sell the portfolio, which is thought to be mainly made up of loans to landlords, to Cerberus Capital Management, the private equity firm.

Shares in Metro bounced 27¾p to close at 500p on the news, which comes two days before it reports its results for the first half of the year. Sky News first reported the talks with Cerberus.

Metro announced two appointments to its executive committee yesterday. Daniel Frumkin, a Briton has who worked at Royal Bank of Scotland, Northern Rock and, most recently, the Bermuda-based Butterfield Bank, will join as chief transformation officer with a brief of improving efficiency and customers’ experience. Cheryl Newton, a Canadian technology specialist who has worked for banks including JP Morgan and Lloyds, will become chief information officer. Both are 55.

The bank is searching for one or more new directors to join its board. Critics are pressing for Metro to replace Vernon Hill as its chairman.

Metro was set up by Mr Hill, 73, in 2010, winning the first new banking licence in the UK in more than 100 years. It now has 67 branches, 1.7 million customers and a £22 billion balance sheet, built on its customer-friendly model of seven-day opening and high service levels. At its peak in spring last year, Metro was worth £3.5 billion.

However, it has been struggling with scepticism about its business model and criticism of its corporate governance. It shocked the stock market in January by revealing that it had wrongly assessed loans to companies and landlords, requiring it to increase its risk-weighted assets by £900 million and to hold more capital than it had expected.

Metro has lost four fifths of its value from its £3.5 billion peak in March last year. The London-based lender raised £375 million in May at £5 a share, but last week dipped below that level.

The bank yesterday confirmed that “discussions regarding the potential sale of a loan portfolio are taking place”. Metro did not give details of what loans it is in talks to sell. John Cronin, an analyst at Goodbody, the broker, said they were likely to be among those whose riskiness was underestimated.

Metro appears to be unwinding part of two earlier deals where it bought assets from Cerberus for £1.1 billion.

Selling all the miscategorised loans at their face value of about £1.6 billion would increase its core equity tier 1 capital, a key measure of financial strength, by 2.4 per cent, Mr Cronin said.

Analysts at Exane BNP Paribas said Metro could also free up capital by securitising about £2 billion of its loan book, but both moves would reduce revenues and profitability.

‘Bank on Dave’ moves step closer to realising dream of being first UK-owned High Street bank in 120 years

Business champion Burnley Savings and Loans Limited (“BSAL”), also known as “Bank on Dave!”, has taken another step towards becoming the first UK owned high-street bank in 120 years and today are announcing a £2.5 million funding round on equity crowdfunding platform Seedrs.

BSAL was established in 2011 by local millionaire businessman Dave Fishwick in the wake of the financial crash and the devastation it left across the North of England.  As a man passionate about his hometown of Burnley, Dave wanted to set up his own business in Lancashire to help inject much-needed support into local community and businesses, and to prove that financial service providers can be socially responsible.

BSAL seeks to respond to the significant market need from SMEs and individuals who may have difficulty or are unable to access credit from mainstream high street financial companies. One of the driving aims of the Company is to lend responsibly, therefore providing the customer with greater opportunity to control their debt, which in turn will help support an improved credit rating in the future.

Over the past 7 years, the Company has seen that customers seeking a modest loan may in the future turn into a customer that wishes to borrow a much larger amount to support their business’s growth, therefore creating a compelling ‘feeder’ acquisition strategy for the Company. 

Dave wants to put the trust, ethics and best-practice back into banking, treating customers as individuals and valued clients. Creating a bank that is an institution from the community, for the community.  

Having already lent nearly £20 million to over 3,000 qualifying borrowers across the UK, the Company is now seeking to grow its reach by becoming an authorised UK bank, which will be called “Bank of Dave”. To do achieve this, BSAL is launching their fundraising round on Seedrs to support the procurement of the IT systems needed in preparation for its bank license application. 

Burnley Savings and Loans Founder, Dave Fishwick said: “The core vision for Bank of Dave is to be the ethical choice provider of loans and savings products to honest hard-working families, helping every generation to grow their business and to save for the future.

We have had brilliant few years acting as a savings and loans provider, but the opportunity to become a fully authorised UK bank will expand our horizons even further, enabling us to help more people around the UK.

We are delighted to be launching our first ever funding round on Seedrs, giving our hundreds of thousands of amazing supporters a chance to share in the first new UK-owned high street bank in over a century.”

CEO James Bradley commented: “We are going through the authorisation process to become a bank and are advancing towards our goal of becoming an authorised UK bank. We continue to witness a real market demand for financial providers that offer essential banking services to customers that traditionally found it difficult or have been unable to access affordable credit. We are confident that once fully authorised that the Bank of Dave will be the bank that delivers this capability.”

For more information, visit: www.seedrs.com/bankondave