David Prosser: Geoghegan's departure from HSBC

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The Independent Online

Outlook What a pickle HSBC has got itself into. After spending the past couple of years gloating about how well it weathered the storm of the financial crisis, it has blundered straight into the path of another squall, this one of its own making.

It now looks increasingly likely that the bank's determination not to give chief executive Michael Geoghegan a leg-up once chairman Stephen Green decamps to a government post in the new year will mean the former's departure too.

No wonder. Since HSBC bought Midland Bank almost two decades ago, each time a vacancy has risen in the chairman's office, the bank's chief executive has stepped up. Not offering the post to Mr Geoghegan this time was therefore certain to be seen as a slight – and to prompt an angry response.

All the more so since promoting your chief executive to chairman is a red flag to those who worry about corporate governance. Having watched HSBC defy the critics in the past, one can see why Mr Geoghegan feels put out that the bank is not prepared to go out to bat for him.

No doubt HSBC will get through the uncertainties caused by the simultaneous departures of its two most senior figures – the mooted replacements, HSBC's finance director Douglas Flint, as chairman, and investment banking chief Stuart Gulliver as chief executive, are continuity candidates of calibre – but this episode has been badly handled and smacks of poor contingency planning.

The one silver lining might be that Mr Geoghegan's departure would avert the corporate governance row inevitable had Mr Flint simply been installed above him. That would have prompted all the traditional worries about a promotion from within, plus the additional headache that the chief executive would have then been reporting to a former subordinate, which would have felt very uncomfortable.

Still, expect shareholders to ask some searching questions if this now pans out as expected. Why did it not want Mr Geoghegan as chairman? And is this period of uncertaintly and vulnerability to come a price worth paying for thwarting him?

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