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In September 2010 while working as the Financial Times’ banking editor, I wrote a news story headlined: HSBC chief Geoghegan threatens to resign. Michael Geoghegan was agitating to be promoted to the chair role. There followed a boardroom row and days of unseemly jostling for the top two jobs. Real damage was done to HSBC’s reputation for professionalism.
That one of the world’s biggest banks (and one of Britain’s most valuable listed companies) should find itself in a similarly chaotic position now, for the second time in 15 years, beggars belief.
Mark Tucker officially left as HSBC chair in September, having landed a new job chairing Asian insurer AIA months earlier. The board has been riven ever since by disagreement over who should replace him. This week it is due to hear pitches from two candidates — former chancellor of the exchequer George Osborne and Goldman Sachs Asia boss Kevin Sneader, a former consultant. A third candidate, seasoned banker Naguib Kheraj, recently withdrew.
How could it come to this? Tucker had done eight years as chair, so was near the nine-year limit under corporate governance norms. A responsible board would have planned for his succession to ensure a smooth handover with no gap in oversight.
At one level this reflects a worrying amateurism, and a shortage of strong chairs, in British boardrooms. Within banking that has been clearly evident. At Barclays, two successive chairs supported former CEO Jes Staley even after evidence emerged about his historic associations with convicted child trafficker Jeffrey Epstein. At NatWest, former chair Howard Davies flip-flopped within a matter of hours, first backing and then sacrificing former CEO Alison Rose, after a client confidentiality row relating to Nigel Farage.
A more recent example, beyond banking, is the abject failure of governance at the BBC, where an editing error on a television documentary led the de facto CEO, director-general Tim Davie, to resign, after a weak low-profile chair failed to control a fractious board.
Tucker, who began as HSBC chair in 2017, was certainly not weak. Generally admired for his no-nonsense work ethic, he nonetheless left a mixed record. The share price during his tenure rose — by about 40 per cent — but it underperformed peers, and Tucker never seemed happy with his CEO picks. (He made three of them.) He must also bear the blame, at least in part, for the current succession mess.
When it comes to appointing a chair, British governance dictates that it is the number two on the board, the “senior independent director”, who should run the process. But a good chair will have prepared the ground by bringing on one or two credible candidates as non-executives in the years before.
Back amid HSBC’s 2010 farrago, former Goldman Sachs partner John Thornton had been recruited to the board as a likely successor to outgoing chair Stephen Green. But his aloof style grated with other directors, making what should have been his natural elevation an impossibility. Geoghegan, meanwhile, had not impressed the board sufficiently as chief executive, to be made chair. Hence the bun fight.
In the recent replay, Tucker added two senior figures to the HSBC board in 2023 — Ann Godbehere, a veteran finance director and non-executive, as the senior independent director and the now acting chair Brendan Nelson, an accountant.
But neither was ever seen as a long-term option for the top job. According to people close to the board, there was a hope that Tucker would stay on longer, potentially beyond the nine-year “comply or explain” limit on directorships, by explaining to regulators why that should happen, rather than complying with the norm. That effort failed — Tucker and regulators may have been equally opposed to the idea. Either way, his swift exploration of other options, and the sudden AIA offer, left HSBC in the lurch.
Godbehere, meanwhile, has also failed to grasp the challenge of finding a credible third party from inside or outside the bank. Even if Tucker ended up leaving a year earlier than originally assumed, a succession plan should have been in place.
After a late scramble to find a replacement chair, Osborne now appears to be the favourite for the role. He would bring an impressive contacts book from his six years as chancellor with strong relationships, particularly in Washington and Beijing, with which he sought a tight UK-China trade alliance when in office. But his knowledge of banking is thin — so thin that regulators will surely think twice about approving him, former chancellor or not.
Even if CEO Georges Elhedery is well regarded, a slow, rather desperate-looking appointment of a non-banker as chair of Europe’s biggest bank is hardly a recipe for success or good governance.
patrick.jenkins@ft.com
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