Europe’s largest bank has a new strategy—but no permanent boss
asked Egon Zehnder, an executive-search firm, to find it a new chief executive. The bank had fired John Flint in August, after 18 months in the job, for being too shy about pursuing profits.then dodged the decision, appointing Noel Quinn, a no-nonsense insider, only on an interim basis. Mr Quinn soon made it clear he wanted the job permanently. He seemed a shoo-in., Europe’s largest bank by assets, unveiled results that fell short of already pale expectations. Hobbled by write-downs of $7.
Undaunted, Mr Quinn announced “one of the deepest restructuring and simplification programmes in our history”. The 155-year-old bank is to shed 35,000 of its 235,000 staff. It intends to cull risk-weighted assets by over $100bn, out of a total of $843bn, by 2022. Its investment bank, its European arm and its American business will bear the brunt of $4.5bn in annual cost cuts. It will thus become even more focused on Asia, where it already makes 90% of its profits.
A bigger worry for investors is whether the bank can do as it promises. Joseph Dickerson of Jefferies, an investment bank, says the overhaul marks’s first real stab at trimming its bloated middle office. But controlling costs is becoming more difficult. For its previous round of scalpel-wielding, in 2015, which was aiming to generate about $5bn in annual cost cuts,booked $4.5bn in restructuring charges.
Boosting sales while cutting expenses is not easy to pull off. Demoralised staff may be hesitant to launch new products. Scale matters in banking, and losing it will make it harder to gain an edge. The asset sales may compound the problem. Reinvesting $100bn in proceeds could take some time:’s Asian risk-weighted assets have barely budged since 2017.
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