HSBC Holdings rocked the financial world Monday, announcing the departure of Chief Executive John Flint after barely a year and a half on the job, saying it needed someone with more vim to revive underperforming businesses in the U.S. and Europe.
The move was a startling break with tradition for a bank that was deeply loyal to its previous two CEOs, who oversaw a decade of poor investments and governance scandals—including record fines for being bankers to Mexican drug gangs and rigging benchmark foreign exchange and interest rates—without facing the ultimate sanction.
Just as remarkably, the decision came on a day that the bank announced a bigger-than-expected rise in profit for the second quarter and the return of $1 billion to shareholders through a buyback program.
“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,” Chairman Mark Tucker said in a statement, which described Flint as leaving “by mutual consent.”
The board’s move follows various unconfirmed reports of tense relations with Flint, who had failed to make decisive progress in improving profitability at the bank’s U.S. and European operations. Chief Financial Officer Ewen Stevenson told analysts on a call Monday that results in the U.S. and in its misfiring European wholesale bank were “unacceptable.” He said in subsequent newspaper interviews that the bank would look to cut 2% of HSBC’s worldwide staff of 235,000, with the aim of tackling too-high cost levels.
However, some of the analysts on the call weren’t convinced. The problems of margin pressure in Europe and low returns are old ones, they noted. One pointed out that the U.S. operation hadn’t generated an adequate return in a decade. (Although, with a return on equity of 6%, it shines compared to Deutsche Bank, which only cut its Wall Street operations two months ago after years of losses.)
Manus Costello, head of global research at Autonomous in London, asked whether the board’s action had anything to do with a Financial Times report in June that said Beijing was considering sanctions against the bank for its role in the arrest of Huawei Chief Financial Officer Meng Wanzhou in Canada last year.
The Department of Justice used documents from HSBC to build its case for charging Huawei with sanctions violations, according to the FT. Huawei was an HSBC client until the bank terminated the relationship in 2017.
“The Chinese are very angry at the treatment of Meng and have asked us about our role in her prosecution,” the FT reported one HSBC employee as saying. “We’ve told them we had a U.S. monitor, with between 200 and 400 people inside the bank at any given time, that had access to everything: stonewalling the DoJ was not an option.”
The Global Times, an English-language website that acts as a mouthpiece for Beijing, cited a Foreign Ministry spokesman on Friday as saying that China is currently drawing up a list of “unreliable entities” that would serve as a rough analog to the U.S. blacklist on which Huawei finds itself.
“For violating China’s banking law, HSBC will face administrative penalties, compensation claims from Huawei, and criminal punishment,” the Global Times said. It wasn’t clear whether the use of the future tense, rather than the conditional, was deliberate or a translation error.
Tucker was in any case at pains to play down Costello’s suggestion, although his response highlights the degree to which HSBC needs its Chinese business to deliver, given the structural challenges it faces in western markets.
“We’ve been in China for over 153 years and have a clear and long-term commitment to China,” Tucker said. “If you look at what we’re doing in China…We’re actively participating in the opening of China’s financial markets, we’re actively participating in the Belt and Road Initiative, we’re actively participating in the development of the Greater Bay area, we’re actively participating in the internationalization of the renminbi and we’re actively participating in the growth of green finance, and we look forward to continuing to support China’s growth and economic prosperity.”
“Our business operations continue as normal,” he said, “we are confident about our China business and we don’t comment on speculation.”
More must-read stories from Fortune:
—Greece’s challenge: “Hundreds of thousands of talented people have left”
—How the European Central Bank has given the Fed the right of way
—What can we expect from Boris Johnson?
—Listen to our audio briefing, Fortune 500 Daily
Catch up with Data Sheet, Fortune‘s daily digest on the business of tech.