Sir John Bond, the executive chairman of HSBC, has just flown in from Hong Kong, arriving at 5 o'clock on the morning of our interview after presenting half-year results in the former colony, now Chinese territory, which was the birthplace in 1865 of one part of the banking behemoth.
Sir John, chief executive and then chairman of HSBC for the past 10 years, flies economy on journeys of up to three hours, and business class for trips of up to seven hours. It is only when the flight extends beyond that, such as Sir John's 12-hour return from Hong Kong to London, that HSBC's top brass move forward into the first-class cabin.
However, to save time and money, Sir John on this morning - as he frequently does - rode in from Heathrow on the back of a motorbike taxi rather than arriving at the bank's Norman Foster- designed Canary Wharf head office in a more conventional company car.
The travel habits of the charming, famously private financier could not be more different than those of William Aldinger, the American head of Household International, who joined the bank when it snapped up his US consumer finance business aimed at the "sub-prime" (high-risk) market for £10bn in March.
Mr Aldinger prefers to make business trips in his company jet, which came as part of his package worth $37m (£23m) over three years, including a hefty potential pay-off if he is fired. The contract landed Sir John, who takes pleasure in his abstemious reputation, in the unhappy position of having to defend bumper pay awards in the recent row about executive pay, culminating in a heated annual general meeting at the end of May.
"We are thrifty, though we could always be thriftier. I was taught on the day I joined HSBC 42 years ago that this is the shareholders' money, not ours," says Sir John, 62.
It looks as though Mr Aldinger's package may well be worth it. Household contributed $649m to HSBC's $6.88bn profits in just three months and opportunities for cheap funding through the bank's balance sheet means the loans business can now put its foot down on the accelerator pedal to add new customers to the 50 million it already has.
The deal also has wider opportunities for HSBC, which is capitalised at £82bn, has more than 100 million customers and operates in 79 countries, including the UK, where it is one of the UK's Big Four banks.
There are apparently 150 PhDs at Household, who do nothing but try to predict what they call "the actuarial likelihood of how people are going to behave". The technique is so sophisticated, Sir John says, that they can predict how many loans will turn sour, within a 5 per cent margin of error.
Clearly, if the PhDs can apply their science to how Americans behave, it should also work for Brazilians, Mexicans, Indians and Chinese. This will mean HSBC will be able, for the first time, to lend money to customers all over the world, including those in countries where populations are growing fastest and where people often want a loan before saving or opening a current account. Lending, especially to those regarded as high risk, is also potentially far more profitable than current accounts and many other retail banking products.
"We are adding a brand new line of business in every country, so there are significant possibilities. We don't know how much yet, we just intuitively know it is there, though it will take time in the years ahead to develop," Sir John says.
The City has been slow to see the potential of Household. When the deal was announced in November last year HSBC was accused of loading itself up with debt and taking its brand downmarket. HSBC did triple its bad debt provisions to $2.37bn, but Sir John points out that as the losses are highly predictable, the business is quite low-risk.
Since stepping into the shoes of William Purves, HSBC's former chairman, who transformed HSBC with deals such as the 1992 acquisition of Midland Bank, at the time the UK's fourth-biggest lender, Sir John has also been on an acquisition spree. His deals have included buying Mexico's fifth-biggest bank, Bital, and Credit Commercial de France as well as Household. While many watchers of the bank say its management is "very cautious", Sir John says: "It is a combination of conservatism and an opportunistic taking of risk."
This is part of what Sir John calls the "HSBC character", and what gets the company's elder statesman, who spent 25 years in Asia and four years in America with the bank, talking animatedly. He says: "We are a group of straightforward people who have worked together for a long period of time and trust each other. We don't suffer from profit-centre-itis and we believe in individual accountability. If a loan goes wrong over $250m you can blame me - and you can blame me for the ones below that, because I am ultimately responsible."
Sir John is particularly keen that his people behave with integrity, which is "at the core of everything we do". He says carefully of HSBC's Wall Street rivals, which have been mired by allegations of biased analyst research and selective selling of stock to clients: "Every bull market creates some excess."
On wider corporate governance, he says the HSBC way is to "comply with the letter and the spirit of regulations". But HSBC does not comply with the Derek Higgs proposal that chief executives should not become their company's chairman.
Sir John replies: "It has worked for HSBC, which is not to say it always will. As long as HSBC produces people of the right calibre to be chairman of this company we will continue to do it." He says he "abhors payment for failure" and adds that he "understands well all of the emotional side" of the argument that it is unseemly for directors to be paid so many times more than many of their employees.
"I don't come from an affluent background," says Sir John, who worked for his passage to Hong Kong by scrubbing decks before starting at the bank. "Bill Dalton [head of HSBC's UK operations] was a railway worker's son. His first loan was with Household. We're just regular people."
The argument is disarming, despite the fact that Sir John last year earned £1.88m, because he frequently stresses he is surrounded by people who he claims are more talented than himself. "The next generation of people in HSBC is far smarter than I am and most of the top team are better educated," says Sir John, who joined HSBC while still a teenager, having spent a year studying in California after leaving school.
This charm is seen far more often by HSBC's customers, both big and small, than by the UK press, whom Sir John remains wary of. Abdul Durrant, a cleaner in HSBC's 42-storey skyscraper, has been treated to the charm, despite standing up at the AGM to complain about his £5-an-hour wage.
Sir John bumped into Mr Durrant the other day. "We had a long chat and he gave us a great plus for introducing Islamic mortgages," Sir John says. "But to be fair to him, and if you want an honest account of the conversation, he said that he wouldn't be able to afford one."
Sir John, who runs every morning, is showing no signs of slowing down, though he will probably not be leading the bank into the outcome of massive changes, such as population explosion in some parts of the world while others go increasingly grey.
"When we look back in five or 10 years' time, we will see this as having been a period of immense change for the financial services industry, which may not be repeated," he says.
But in the meantime he modestly says he is there as the "corporate memory", to remind colleagues of past failures as well as successes. And he imbues the HSBC values in the young tykes who start at the bank every year.
Sir John points out: "There aren't many people in my position, who can say to the next generation of recruits 'you've made a smart decision: if I were starting over again I would do the same thing'. Lots of people might say that - but I actually mean it."
SIR JOHN BOND - FRUGAL FINANCIER
Position: Executive chairman, HSBC
Career record: Joined Hongkong and Shanghai Banking Corporation in 1961, worked in Asia as executive director and then responsible for all of bank's commercial banking operations. In the US he was president and CEO of HSBC USA. Came to London in 1993 as chief executive of the group. Became chairman in 1998. Attended Tonbridge School in Kent.
Interests: Sir John is married to Elizabeth, and has two daughters and a son. He enjoys sailing and golf.Reuse content