To be CEO after Geoghegan leaves year-end in power struggle.
HSBC Holdings Plc investors welcomed plans to name Stuart Gulliver chief executive officer following Michael Geoghegan’s resignation.
Gulliver will become CEO when Geoghegan, 56, leaves at year-end, a person briefed on the matter said. Chairman Stephen Green, who quit this month to become Britain’s trade minister, will be replaced by Finance Director Douglas Flint, said the person, who spoke on condition of anonymity.
The two are taking over as Geoghegan, who has worked at HSBC for 37 years, struggled to attract investor support to take the chairmanship. In a Bloomberg survey of 20 HSBC shareholders yesterday, not one backed him for the job. Geoghegan threatened to quit if he were passed over, the Financial Times said this week, a report an HSBC spokesman described as “nonsense.”
“No-one is indispensable,” said Colin McLean, who helps manage £560 million ($880 million) at SVM Asset Management in Edinburgh, including HSBC shares. “When someone has laid their position on the line, the board was put in an impossible position,” he added. “It’s a very satisfactory result,” he said of Gulliver and Flint’s appointment.
HSBC shares closed up 0.4 per cent at 666.3 pence in London trading, the smallest gain among Britain’s five biggest banks. The stock has dropped 6 percent this year, making it the worst- performing UK lender in the period.
‘Reasonable compromise’
“They haven’t been held hostage,” said Jane Coffey, head of UK equities at Royal London Asset Management, which manages $51 billion, including HSBC stock. “It seems like a reasonable compromise. In the end they have two pretty good people.”
The personnel turnover at the top of HSBC, founded in Hong Kong and Shanghai in 1865, was triggered by Green’s September 7 decision. HSBC’s board will meet in Shanghai on September 29 to formally vote on the decisions, and the changes are subject to regulatory approval, the person briefed on the matter said.
While HSBC didn’t want Geoghegan to leave, according to the person briefed on the talks, investors opposed his elevation to chairman because it would break UK corporate governance rules designed to foster board independence.
“HSBC is losing its chairman and chief executive within weeks of each other in an unplanned way, which is not a good thing,” said Mike Trippitt, an analyst at Oriel Securities Ltd in London.
Investment bank
Gulliver, 51, runs a division that doubled operating profit between 2005 and 2009 to become HSBC’s biggest earner. Flint’s and Gulliver’s combined 45 years of experience at HSBC may help alleviate concerns that the change would hurt profit, investors and analysts said.
Revenue at Gulliver’s global corporate, investment banking and markets division almost doubled to $21.9 billion last year from $11.5 billion in 2005, according to data compiled by Bloomberg. The unit’s operating income jumped to $10.1 billion from $4.9 billion in the period.
He is the second investment-banking executive picked to lead one of the four biggest UK banks this month, following Barclays Plc’s appointment of Bob Diamond on September 7. Diamond’s promotion was criticised by Business Secretary Vince Cable.
Gulliver was born in England and educated at Oxford University. He joined HSBC in 1980 and held senior roles in Hong Kong and Tokyo, running the investment bank in Asia before moving to London in early 2003. He became head of the global corporate, investment banking and markets division with John Studzinski, who departed in 2006, leaving Gulliver in charge of HSBC’s global investment banking and trading business.
