HSBC has had a good crisis. It avoided many pitfalls and has gained a reputation for transparency and conservative risk management. The acquisition of sub-prime lender Household International in 2003 was a bad mistake and the bank is still provisioning against this. The disastrous deal probably means that, in future, HSBC will view organic growth as optimum. I was interested that, last autumn, HSBC did not pounce on any of the floundering US investment banks even though many commentators talked about a deal with Morgan Stanley. Another thing that HSBC does well is succession planning. “We grow our own timber,” a mole mused. And some are wondering who might be in line to succeed present chief executive Mike Geoghegan should he move on in a few years. Two internal candidates are mentioned: Sandy Flockhart, head of the bank’s Asian operation and global head of commercial banking, and Stuart Gulliver, head of the investment bank and the asset management division, whose nickname within the company is Mr Money-Maker. Both men have had highly successful careers so far within the organization although Flockhart’s experience is perhaps broader and includes commercial banking, which in the past has been viewed as the core of HSBC’s franchise. Another potential internal candidate could be Douglas Flint, HSBC’s highly respected finance director.
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HSBC has outperformed many of its peers. It is worth noting that the firm has an executive chairman. This role is increasingly denigrated by UK corporate governance experts. It is unlikely that both HSBC’s chairman, Stephen Green, and its chief executive, Mike Geoghegan, will leave the bank at the same time. However, when Green, who is 60, leaves, there are several impressive candidates who could replace him. If the bank decided to continue with an executive chairman, Geoghegan could fill the role. If HSBC were to appoint a non-executive chairman, a possibility would be 67-year-old Simon Robertson, the firm’s senior independent non-executive director. If Robertson is considered too old, John Thornton, a former Goldman Sachs president, is a non-executive board member of HSBC. Today, Thornton, 55, is non-executive chairman of HSBC North America Holdings. I can’t believe such a talented banker is satisfied by such a peripheral role. Also Thornton has extensive Chinese experience and connections that would be hugely beneficial for a chairman of HSBC. There are a lot of moving pieces in the HSBC senior management jigsaw and I will watch with interest how the story plays out over the next few years.
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