Top leadership shakeup at HSBC

HSBC late Friday announced a shakeup of its top leadership that was sparked by the nomination of chairman Stephen Green to a government post earlier this month. However, the reshuffle became a lot more dramatic than initially perceived when CEO Michael Geoghegan announced his resignation, leaving the board with not one, but two key positions to fill.

This opened up for a promotion of Asia veteran Stuart Gulliver to CEO, a position that he will take up on January 1. In a continuation of Geoghegan’s relocation to Hong Kong in February this year, Gulliver will return to this former stomping ground for his new job after six years in London. Subject to regulatory approvals, he will also be appointed chairman of The Hongkong and Shanghai Banking Corporation Limited, the Hong Kong-based arm of HSBC, which locally is still known at Hongkong Bank. Gulliver, who has spent 30 years with HSBC, is currently chairman for Europe, Middle East and global businesses and has been an executive director since 2008.

HSBC also named Douglas Flint, the bank’s chief financial officer since 1995, as its new chairman. He will succeed Green following the board meeting on December 3. As reported earlier, Green, who has been with HSBC for 28 years and took over as chairman in 2007, is stepping down following a call by UK prime minister David Cameron to become minister of state for trade and investment in January 2011. 

Geoghegan has supposedly announced his resignation after being passed over for the chairman’s job. London-based media late last week described a behind-the-scenes wrangling for the position that involved primarily Geoghegan and John Thornton, a former Goldman Sachs banker who has been a non-executive member of HSBC's board since 2008. It has been a tradition for HSBC to groom its CEO to become the next chairman, making the decision to look beyond Geoghegan, who has spent the past 37 years with HSBC, an unusual one.

However, in its announcement of the leadership changes, HSBC denied any form of a power struggle and said it had been Geoghegan’s suggestion, upon Green’s decision to step down earlier than planned, to accelerate the management succession plan and appoint his successor now, so that a new leadership team would be in place in 2011.

“As the senior independent non-executive director who has led this process, I can confirm that [Geoghegan] has always wanted to do what is right for HSBC and supported putting the new top team in place at an early stage. He has behaved with great integrity throughout. Any suggestions to the contrary are unfounded,” said Simon Robertson, a senior independent non-executive director who as a member of the nomination committee was put in charge of the search for a new chairman.

HSBC also noted that the appointment of Flint, who has been leading the bank’s interactions with regulators at the board level, was a unanimous decision by the board and comes after discussions with a number of major institutional shareholders. It was made after taking into account a number of factors, including “the need to contribute to the unprecedented regulatory and public policy debate on the future shape of the banking industry, in particular, systemically important financial institutions operating globally with a universal banking model; the full-time demands of this engagement and the personal standing to represent HSBC at the highest levels; a deep understanding and experience of international financial services; and extensive experience of board governance and stakeholder engagement”.