Geoghegan set to quit HSBC by year-end

(News Today) - Michael Geoghegan is to step down as chief executive of HSBC at the end of the year, according to two people close to the bank's board.

He will be replaced by Stuart Gulliver, head of the group's investment bank.

At the same time, Douglas Flint will take over as chairman from Stephen Green, who announced a fortnight ago that he will take up a government job in January as the UK trade minister. The double changeover at the head of the global banking group follows a turbulent two weeks of jostling for position among board members, following Green's announcement.

HSBC employees said there were looking forward to a conclusion to the succession process.

"Most of us are assuming it's going to be Gulliver," said an HSBC executive in Hong Kong on Friday. "People will be happy to see him move up." The bank's shares opened 1.4 percent lower at HK$80 but later recovered to $80.70.

If confirmed at next week's board meeting, Gulliver's appointment would mark the second elevation of a highly-paid investment banker in as many weeks, following news that Bob Diamond, the boss of Barclays' investment bank, is to be the group's next chief executive.

The HSBC succession process, which is being led by senior independent director Sir Simon Robertson, has caused surprising rifts in the boardroom and has a different outcome to the one first envisaged. When Sir Simon began his succession planning several months ago, there were two main contenders for the chairman's job -- Geoghegan and former Goldman Sachs executive and HSBC non-executive director John Thornton.

But the prospect of the top job being filled by Thornton, a strong character unlikely to play a low-key oversight role as chairman, appears to have rankled with Geoghegan.

Two people close to the board told the Financial Times earlier this week that Geoghegan had threatened to resign if he was not made chairman and if Thornton secured the role instead, a report which the bank denied as "nonsense."

One person close to the board said on Thursday it was now 90 percent certain Flint and Gulliver would be the new top team. Another said it was "a done deal", which would be rubberstamped at board meetings taking place on Tuesday and Wednesday in Shanghai.

Bankers said the dramatic goings-on at the top of HSBC were totally out of character with the group's reputation for smooth, quiet, consensus-based management. "This is insane," said one. "It's like a nest of vipers."

Although such a dramatic overhaul at the top of HSBC could concern investors, one senior London banker who knows HSBC well said they should be pleased with the outcome. "Flint and Gulliver would be a spectacular combination. It would be the dream ticket."

Flint is a respected finance director who is widely reckoned to have the necessary skills for the chairman's role.

Gulliver, who has been fronting the bank's operations in the UK since Geoghegan's relocation to Hong Kong at the beginning of the year, is credited with realigning the investment banking business with the group's core emerging markets focus.

One person close to the board said Sir Simon would now be given a deputy chairman's role, to help buttress corporate governance controls at the bank.

HSBC executives cautioned that the UK Financial Services Authority, the bank's chief regulator, would also have to sign off on the appointments. HSBC declined to comment.

The prospect of the top two executives of HSBC leaving simultaneously caps a tumultuous week in European banking. Last week, on the same day that Mr Green's departure for government was announced, John Varley, chief executive of Barclays, announced his retirement.

The choice of Gulliver as chief executive is bound to attract some criticism in UK political circles, particularly among the Liberal Democrats who expressed outrage at Diamond's promotion at Barclays. But HSBC can fairly portray Gulliver as a different kind of banker, given the group's low risk profile and emerging markets focus.

Source : CNN

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