HONG KONG/LONDON (Reuters) � A dramatic upheaval among HSBC's (HSBA.L) (0005.HK) top management after a boardroom row has left the bank scrambling to limit damage to its reputation but unlikely to alter its increasing focus on Asia.
Chief Executive Michael Geoghegan is set to be replaced by Stuart Gulliver, the head of investment banking, a person familiar with the matter said on Thursday.
Its Finance Director Douglas Flint is to take over as chairman, as a power struggle after the announced departure of its chairman two weeks ago spread across the board.
"It's quite remarkable for a company that's renowned for its stewardship," said Chris Wheeler, analyst at Mediobanca in London.
"It's got to be bad news in the short term. It's not affecting the underlying performance, but it looks ugly and it's unstable for a bank that's come through this (crisis) looking very healthy," he said.
Shares in HSBC, the world's third biggest bank and the largest outside China, were up 0.2 percent at 665.3 pence in London at 1001 GMT. Its Hong Kong-listed shares dipped 0.6 percent.
"The overall broad strategy is going to remain constant," said Dominic Chan, an analyst at BNP Paribas. "The (possible) Nedbank purchase and everything they've said recently all says they're not going to suddenly change direction and decide they want to be an investment bank."
The board shake-up was triggered by news two weeks ago that Chairman Stephen Green was leaving for a ministerial position in the British government.
That prompted jostling for position by board members. Geoghegan threatened to quit if he was not made chairman, the Financial Times reported this week, which the bank dismissed as "nonsense."
Analysts broadly welcomed the potential Flint and Gulliver double-act. Both are HSBC veterans and have a firm grip on the complexities of the bank, which spans 86 countries.
"It's an unusual move, but with banking becoming an increasingly regulated sector, Flint is actually a good choice," said Daniel Tabbush, an analyst at CLSA in Bangkok.
"He's a conservative player who knows the business well, has a clear understanding of accounting systems in various countries, as well as how profitable each country is, so he's going to represent some continuity."
GOVERNANCE CONCERNS
Gulliver had been groomed for the CEO role and was given wider responsibility for running Europe and the Middle East when Geoghegan moved to Hong Kong earlier this year.
That symbolized HSBC's greater emerging markets push -- it aims to be listed on Shanghai's international board and is in talks to buy a majority of South Africa's Nedbank (NEDJ.J).
It was not clear if Gulliver would move to Hong Kong from his current London location.
If confirmed, Gulliver would become the second investment banking chief to be named chief executive of a top British bank this month, following Bob Diamond's appointment as CEO of Barclays Plc (BARC.L).
That comes despite a backlash against riskier investment banking among politicians. UK banks will be subjected to a wide-ranging probe that will examine the possible break-up of retail and investment banks and ways to boost competition, a commission said on Friday.
Critics said the appointment of Flint would also go against best corporate governance practice, as it is hard for a former executive to be objective about strategic decisions they may have helped make and could be reluctant to reverse them.
"This stuff has to be looked at on a case-by-case basis," said a corporate governance director at a UK asset manager.
"The role of a chairman is to be an independent voice vis-a-vis how the CEO's operating and to have a very critical and objective eye toward the strategy... human nature is what it is; people will want to see their legacies preserved," he said.
HSBC has a history of promoting from within and angered investors five years ago when it promoted Green to chairman. It wrote to shareholders before that was voted on, citing its size, geographical spread and complexity as reasons for not complying with best practice.
(Additional reporting by Clare Jim, Joel Dimmock and Cecilia Valente; Editing by Chris Lewis and Mike Nesbit)
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