HSBC CHIEF executive Michael Geoghegan is set to step down from his role before the end of the year to make way for investment banker Stuart Gulliver, after a boardroom coup that will rock the banking sector.
Geoghegan’s ego will be dealt a further blow with the appointment of HSBC’s finance director Douglas Flint as chairman, a role Geoghegan is understood to have coveted since Stephen Green’s resignation earlier this month.
HSBC’s nominations committee has submitted recommendations for Gulliver and Flint to the board, paving the way for official approval of the shake-up when the directors meet in Shanghai next Wednesday.
City A.M. understands that Gulliver, the widely-respected head of HSBC’s investment bank, is to move out to Hong Kong to take up the chief executive’s role, after Geoghegan relocated last year to be closer to the beating heart of the group’s operations in the emerging markets of the East.
Flint, as chairman, will remain based in London at the group’s corporate headquarters.
News of the boardroom shake-up comes after planning for Green’s succession took a heated turn. Earlier this week, Geoghegan is said to have boiled over at the suggestion that former Goldman Sachs banker John Thornton, one of HSBC’s non-executives, take up the chair in his place.
Geoghegan had been grooming Gulliver to be his own successor as chief executive and is thought to have favoured a scenario with himself in the chair in Hong Kong and Gulliver as a London-based chief executive.
Despite the upheaval, investors are likely to be reassured at the prospect of two of HSBC’s most capable old hands taking control. Gulliver has spent almost three decades at HSBC, while Flint joined fifteen years ago.
Iain Mackay, the finance director of HSBC’s Asian operations, is set to be named to replace Flint as group finance director, the third cog in the new management wheel for the bank.
HSBC last night reiterated that “no decision has formally been made”. The FSA still needs to sign off on the moves. They mark the continuation of a period of extraordinary upheaval at Britain’s largest banks, with the resignations of both Barclays chief executive John Varley, who will be replaced by investment banker Bob Diamond, and Lloyds chief executive Eric Daniels in the past few weeks.
Barclays’ and HSBC’s decision to install well-known investment bankers as their chief executives is likely to see them come under political pressure.