Michael Geoghegan loses out in HSBC power struggle?

If the HSBC CEO really did threaten to leave if he wasn't made chairman, it looks like the board has called his bluff...

by James Taylor
Last Updated: 19 Aug 2013
The drama continues at HBSC, usually one of the least dramatic organisations on the planet: reports suggest that CEO Michael Geoghegan will not be appointed chairman in place of the departing Stephen Green, with FD Douglas Flint set to be given the job instead. As a result, Geoghegan will apparently be leaving HSBC altogether - with investment banking chief Stuart Gulliver promoted to CEO in his place. Apparently it'll all be signed off next week, bringing to an end a very public and rather unedifying power struggle that couldn't be less HSBC..,

The news follows the FT story earlier this week that Geoghegan had threatened to leave if he wasn't made chairman - which HSBC hotly denied. Perhaps it wasn't quite as dramatic as that, but the underlying premise seems plausible. The bank has a tradition of promoting its chief exec to the chairman role, which is normally the most powerful in the bank. So as an HSBC lifer who's come up through the retail business, with a good record as CEO, Geoghegan would be entitled to feel that he had the best claim to the job. And if they brought in an outsider effectively over his head (like ex-Goldmanite John Thornton, the initial front-runner), you'd expect him to 'seriously consider his future', as they say.

Geoghegan could hardly be more different to the studious and intellectual Green. In our profile of him last year (one of the few interviews he ever did as HSBC boss), MT's Chris Blackhurst described him as 'a banker's banker... a fast talker who shoots from the hip... decisive and quick-thinking, he can also be short-tempered and impatient'. Was that really the kind of person HSBC shareholders wanted as their chairman, particularly at the moment? The retail side of the bank seems to have supported his elevation, as you'd expect, but others were clearly less so (and not just those who wanted to conform to governance best practice by appointing an independent non-exec chairman). Either way, insofar as there was a boardroom power struggle, Geoghegan appears to have lost it.

So what of the men expected to take the helm? Well, current FD Flint (who'll apparently be executive chairman) has an impeccable reputation - and perhaps significantly, he's regarded as one of the industry's foremost experts on the technicalities of financial regulation. That might not make him a hoot at parties, but it'll be hugely handy for HSBC as it engages with governments at home and abroad about the future of the banking industry. Gulliver too was considered a rising star and future CEO; his promotion has just come a little earlier than expected. Although the fact that another 'casino' investment banker is getting a top job won't play well with the politicians.

For most companies, losing both of your top two senior execs in the space of a few months would be a disaster. But both Flint and Gulliver are very highly rated, and promoting from within does create an impression of continuity. The board has also done a good job of briefing the press (an unnamed source even described them rather sycophantically in today's FT as 'the dream ticket'). Onwards and upwards, then. And although it's hard not to feel sorry for Geoghegan, given his 37 years of long and distinguished service, we imagine he'll be handsomely compensated for the inconvenience. Besides, he knows how the game works as well as anyone. 'If someone doesn't get the culture, they don't seem to survive,' he told MT last year. QED.

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