BIG companies need to get their PR in order. BP’s reaction to its oil spill was all over the place at first, with its CEO Tony Hayward repeatedly putting his foot in it; the Prudential failed to communicate adequately to the media and shareholders during its hopelessly mismanaged bid for AIA. Now, disappointingly, it is HSBC’s turn to mess up on the communications front.
It branded as “offensive” a story in another newspaper earlier this week stating that its chief executive had threatened to resign unless he were appointed chairman. Fair enough – apart from the fact that it now turns out that Michael Geoghegan did indeed fail to land the top job and is therefore standing down. I have no doubt that the firm was acting in good faith and that the original denial was technically true – but the fact that the end result is identical has angered many journalists and left HSBC with egg on its face.
Not that any of this should detract us from the astonishing and brutal coup that has just taken place at the top of such a large and usually staid institution. A bitter and seemingly uncontrollable power struggle, triggered by Stephen Green’s resignation as chairman and appointment as trade minister, has torn HSBC’s boardroom apart; it goes to show that personalities matter immensely, even in an organization that could run on auto-pilot most of the time.
It is good that an HSBC insider – Douglas Flint, the current chief financial officer and a KPMG graduate who has worked at HSBC since 1995 – is being appointed as the firm’s next chairman; promoting from within is a tradition that has served the firm well, helped maintain its strong corporate culture and contributed to the cautious conservatism which saw it through the crisis. Flint is used to dealing with regulators; he ought to perform well as the firm’s new public face in London.
Stuart Gulliver, the firm’s head of investment banking, is an equally good choice as the new chief executive; a talented and charismatic operator, he built up the bank’s sophisticated wholesale and markets operation, succeeding where his predecessors had failed. Like Bob Diamond’s appointment as CEO of Barclays, it is also a brave choice politically: Gulliver has earned millions in recent years. To the likes of Vince Cable, the business secretary, this is a bad thing; it will certainly fuel the rage of the populist and left-wing media. Yet the big financial institutions are rightly putting their shareholders first (after years of neglecting them), rather than pandering to the UK government’s absurd anti-investment banking mood.
It will be a shame to see Geoghegan go. He was a hands-on, operations man, a down to earth banker who steered the firm through the credit crisis – it never needed a bailout – and sorted out the Household mess in the US. He did make mistakes, of course: one of his errors was that he mishandled his compensation; nearly a quarter of shareholders failed to back the bank's pay proposals for its directors earlier this year. But let us hope he reemerges soon in another role.
Following the shake-up at Barclays and Eric Daniels’ looming departure from Lloyds, it is all change at the top of British banking. If the government had any sense, it would use the opportunity to draw a line under its City-bashing rhetoric and acknowledge that the UK needs a strong and healthy financial industry. One can but hope. firstname.lastname@example.org