In September 2010, when I was the banking editor at the Financial Times, I wrote a story titled “HSBC chief Geoghegan hints at resignation.” Michael Geoghegan aimed for a promotion to chairman. Following that, there were some intense boardroom disagreements and a rather messy competition for the top roles. This, unfortunately, hurt HSBC’s reputation for professionalism.
It’s quite astonishing, really, that a major bank like HSBC, one of Britain’s top public companies, finds itself in such a tumultuous situation again in just 15 years.
Mark Tucker officially resigned as HSBC’s chairman in September and started a new role as chairman at Asian insurer AIA a few months back. Since then, the board has been split over who should succeed him. This week, we’ll hear from two candidates: former Chancellor George Osborne and Kevin Sneader, who leads Goldman Sachs’ Asia division. A third contender, veteran banker Naguib Kherazi, has stepped back.
So, how did this situation arise? Tucker served for eight years and was nearing the limit set by corporate governance standards. A competent board should have had a succession plan ready to facilitate a smooth transition.
This somehow points to a troubling lack of professionalism and robustness in British boardrooms, especially noticeable in the banking sector. For instance, at Barclays, two successive chairmen supported the former CEO Jess Staley, even after the firm’s troubling connections with Jeffrey Epstein came to light. At NatWest, former chairman Howard Davies changed his stance in mere hours regarding customer confidentiality linked to Nigel Farage, first backing and then discarding former CEO Alison Rose.
There are recent examples beyond banking too, like the BBC’s governance flaws. An editing mistake in a documentary led to the resignation of Director-General Tim Davie, reflecting the ineffectual leadership of the chairman in managing a challenging board.
Tucker, who became HSBC’s chairman in 2017, wasn’t seen as weak. Although he had a strong work ethic, his tenure was mixed. While the company’s stock increased about 40% on his watch, it didn’t fare as well as its rivals, and he always seemed uneasy with his choice of CEO (having appointed three). So, he must bear some responsibility for the current succession dilemmas.
Per UK governance norms, the ‘senior independent director’ is expected to lead the process of selecting a new chair. Yet, a competent chair would have ideally built a stable foundation by introducing some trustworthy candidates as non-executive directors.
Back in the chaos of 2010, the board had hired John Thornton, a former Goldman Sachs partner, to succeed chairman Stephen Green, but his detached management style hampered trust among the directors. Geoghegan was appointed chairman despite not leaving a strong impression as CEO, leading to boardroom struggles.
In 2023, Tucker attempted to strengthen the HSBC board by incorporating two senior figures: Anne Godbehere, an experienced finance director and non-executive member, along with accountant Brendan Nelson, who is currently the acting chairman.
However, neither was seen as a viable long-term candidate for chair. There were hopes Tucker could extend his time on the board past the nine-year compliance limit, possibly by justifying it to regulators, but that plan fell through, leaving the search for a replacement urgent.
Despite the abrupt need for a new chair, Osborne now seems to be leading the pack. He brings a considerable network from his years as Prime Minister, along with close connections to Washington and Beijing, aiming for stronger trade ties between Britain and China. But his banking knowledge is quite limited, and regulatory approval will likely be meticulous, regardless of his political background.
Even if CEO Georges Ergederi is well-regarded, appointing a non-banker as chairman of Europe’s largest bank doesn’t exactly inspire confidence in good governance.
