Outgoing HSBC boss concedes 'time for the next generation'
HSBC's outgoing chief executive conceded it was "time for the next generation" after reportedly losing a boardroom power struggle that culminated in his resignation and a major management shake-up.
Michael Geoghegan also admitted he was never approached to replace Stephen Green as chairman, following a day of drama Friday which saw him announce his retirement after 37 years with the lender.
Two new people were named to lead the bank, with Geoghegan being replaced as chief executive by HSBC's head of investment banking, Stuart Gulliver.
Finance director Douglas Flint was named the new chairman as the bank looks to build on its recovery after the financial crisis as well as profiting from strong growth in Asia.
The announcements came after markets closed in London.
The dramatic overhaul at the top of HSBC caps a tumultuous period for the bank since Green announced he was quitting earlier this month to become Britain's trade minister.
Speculation over boardroom machinations had reached fever pitch in recent days, with one report in the Financial Times claiming that Geoghegan had threatened to quit if his main rival to become chairman was given the job.
At the time, HSBC dismissed the report as "nonsense."
Geoghegan, 56, admitted Friday the board had not asked him to be chairman and he had concluded that it was time for a change of leadership, while Green dismissed reports of turmoil at the top of the bank as "absolute nonsense."
"I came very quickly to the conclusion, about 10 or 12 days ago, it was time for the next generation," Geoghegan told reporters in a conference call Thursday.
"I never really went out of my way to be chairman.
"It's been historical at this company that the chief executive goes on to be chairman but you have to be asked and the reality was, I wasn't asked."
Green added: "For the record, all the parties involved in this transition have behaved impeccably and graciously throughout it and it is absolute nonsense to suggest otherwise."
But the British press on Saturday remained convinced that HSBC had been rocked by a messy succession process and shook their heads in disbelief.
"Ego, pride and those awkward things, events, can make a mockery of whatever succession plan a board has tucked away in a dusty drawer," said The Times.
Geoghegan's closest rival for the chairman's job was considered to be HSBC non-executive director John Thornton, but choosing between the pair proved too difficult for the bank's board, according to the FT.
Flint emerged as the compromise candidate, said the paper.
Hong Kong-based Geoghegan will step down on December 31 but will continue to be employed by the group in an advisory capacity until March 31, 2011, the bank said.
He will receive a pay-out worth 1.42 million pounds (1.67 million euros, 2.25 million dollars), excluding bonuses, said the bank.
His replacement Gulliver, who will also be based in Hong Kong, will receive 1.25 million pounds and be entitled to performance-related bonuses.
New chairman Flint will earn a basic annual salary of 1.5 million pounds but will not be entitled to any bonus or share incentive awards, HSBC said.
Flint, a Scotsman who has been involved in efforts to improve public confidence in Britain's financial system, vowed HSBC would strive to "restore trust in the banking industry by learning from mistakes made in recent years."
The promotion of Gulliver meanwhile is the second time in a month that a highly paid investment banker has been elevated to chief executive of a major bank, following Bob Diamond's appointment at Barclays.
The management changes were triggered by the announcement on September 7 that Green would join the British government early next year.
Green, who spent 28 years at Asia-focused HSBC, is leaving the bank in rude health after steering it through the global financial crisis without taking a government bailout.
HSBC, founded in Hong Kong and Shanghai in 1865, sees Asia as its most important region although it remains headquartered in London.
© 2010 AFP