7:56 AM
HSBC power struggle forces top team shake-up
Addison Ray
By Kelvin Soh and Steve Slater
HONG KONG/LONDON | Fri Sep 24, 2010 7:34am EDT
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).
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