Friday, September 24, 2010

Hopelessly Stumped Banking Corporation

HSBC is a solid, and perhaps staid, bank. It rode the financial crisis reasonably well and generally stays out of the headlines. Surprising then to see it on top of the financial news for the last five days thanks to a messy succession saga.

Here's what happened. Successions in HSBC are very orderly. The Chairman retires to tend to his garden somewhere in the English countryside. The CEO becomes the Chairman. The senior most executive being groomed for years, takes over as CEO. All very dignified and solemn. The Board congratulates itself over many glasses of the finest bubbly. The money continues to pour in and all is well in the world.

This time the script went wrong. Stephen Green , the current Chairman, had indicated in May that he wanted to retire in a year's time. A search firm was duly appointed to recommend that there were no suitable outside candidates so that the pesky shareholders can be told to keep quiet. But suddenly Stephen Green was asked to join the UK cabinet as Trade Minister. The garden could wait. Off he decided to go, some months in advance.

So they had to appoint a Chairman "quickly". To complicate matters, there was an outside candidate who would be eminently qualified. John Thornton, ex Goldman Sachs, who famously gave up a shot at the top Goldman post some years ago to move to Beijing and teach at the Tsinghua University. He was already a non executive director of HSBC and apparently was interested.

In stepped Michael Geoghan, the current CEO of HSBC. He couldn't believe that they were really thinking of not giving him, what was his "right". He said  - No way John Thornton. Perhaps even, "over my dead body". Stalemate. The Board didn't want to give it to Geoghan either- he was a bit too brash and they didn't like him all that much. So if not Geoghan, who else ? The insiders were up in arms against any outsider coming in.

So they plumped for Douglas Flint, the current CFO as Chairman. But this left Geoghan in a quandary. His subordinate was going to become his boss. He wouldn't accept that and decided to quit as well. Up stepped Stuart Gulliver who was being groomed for the CEO's job anyway, but which landed on his lap some years ahead of time.

All round dissatisfaction and tut-tutting. New Chairman and new CEO, all in the space of one week. Of such politicking are boardrooms made of. Now nobody is sure if the money will continue to pour in. Or the flow of the bubbly, for that matter.

So here's material for a Kollywood typical, starring Rajnikanth as Stephen Green, Vijay as Geoghan, Surya as Gulliver, Vikram as Flint , Prakash Raj as Thornton and the delectable Asin as the tea lady !

PS : This blogger is constrained to disclose that he banks with the said bank !