The future of HSBC, Britain's largest bank, was last night thrown into disarray as it emerged that Micheal Geoghegan, its chief executive, is now almost certain to step down at the end of the year after failing to secure the chairman's role.
While a source close to the bank said the board was still considering how it would deal with the departure of Stephen Green, the current chairman, who is to become a Government trade minister in January, and that no final decision has been made, it is understood that the departure of Mr Geoghegan is almost inevitable.
He is likely to be succeeded by Stuart Gulliver, who is currently head of HSBC's investment banking operation, while Douglas Flint, the bank's finance director, is expected to succeed Mr Green as chairman.
The appointments would have to be signed off by the Financial Services Authority, the UK's chief City regulator, and may not be announced until next week, with HSBC's board currently not due to meet until Wednesday.
However, Mr Geoghegan's position is now said to be untenable. Reports earlier in the week that he had threatened to resign unless given the chairman's job have been dismissed by the bank as "nonsense", but privately, insiders admit that there are senior figures at HSBC who do oppose his appointment.
Even the suggestion that HSBC's board might reject Mr Geoghegan's application for the chairmanship would hugely undermine his credibility. In its modern incarnation, since taking over Midland Bank in 1992, HSBC has never previously looked beyond its chief executive when a vacancy in the chairman's office has arisen.
Moreover, while HSBC has officially denied the stories that Mr Geoghegan tried to force the bank to bend to his will, the speculation appears to have hardened opposition to him, amid fears that if he was now given the role the bank might look weak.
The events of this week will be seen as a personal tragedy for Mr Geoghegan who has worked for HSBC for 37 years. Earlier this year he relocated to Hong Kong in a move that many investors interpreted as a signal he was preparing for the chairman's role, though a vacancy had not been expected to arise so soon.
There will also be criticism of the way that HSBC has handled the succession process, with shareholders likely to be concerned by the simultaneous departures of its two most senior executives. The search for a new chairman has been handled by the bank's most senior independent non-executive director, the former Goldman Sachs banker Sir Simon Robertson, who cannot have imagined that his assignment would end this way.
On the positive side, the appointment of Mr Gulliver, widely respected for his stewardship of HSBC's investment banking operation, and tipped as a potential replacement for Eric Daniels, the departing chief executive of Lloyds Banking Group, will reassure the markets, while Mr Flint is also highly regarded.
However, Mr Gulliver's background may cause some angst in political circles. When Bob Diamond, the most senior investment banker at Barclays Bank, was unveiled as its next chief executive earlier this month, it prompted a storm of controversy. Mr Gulliver's rewards have never matched Mr Diamond's remuneration, but he was paid more than £10m this year.
The culmination of the bitter power struggle at HSBC marks the end of a remarkable few weeks for Britain's banks. Mr Geoghegan's departure will mean three of the big four, HSBC, Lloyds and Barclays, have seen a changing of the guard in a fortnight.
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