Sir John Bond announced yesterday he will step down as chairman of the banking giant HSBC in May. He will be replaced by Stephen Green, the chief executive, in an internal reshuffle that flies in the face of corporate governance rules.
The rules, which were brought in after a report by Sir Derek Higgs, frown upon the promotion of a chief executive to the chair, to safeguard the independence of the role. A similar move by HSBC's rival Barclays in 2003, when its Canadian chief executive Matt Barrett became chairman, sparked an outcry among shareholders.
HSBC, the world's third-biggest bank, insisted it was acting in the best interests of shareholders and had their full backing. The bank, which operates across 77 countries and has 250,000 employees and 110 million customers, said it was too big and too diverse to appoint an outsider
HSBC said the governance guidelines were never intended to apply to the replacement of executive chairman such as Sir John, but rather to more traditional non-executives. A spokesman for the bank said: "We have spoken to shareholders and they have been positive about this. We usually get a pat on the back for internal promotions, provided we are open and honest with them."
Experts and major shareholders gave a cautious welcome to the reshuffle. HSBC shares eased 1p to 940p, valuing the company at about £106bn.
A spokesman for the Association of British Insurers, the trade body, said: "Based on the initial reading of the explanation by HSBC, we would expect our members to be broadly supportive of this. But some may have questions over the detail, which they will put to the bank."
Few within the City were surprised that Sir John's replacement is to come from within the bank. HSBC has not hired an outsider to lead it in its 140-year history.
Neil Wesley, a fund manager at Morley, said: "This is consistent with HSBC's stated strategy of succession planning. I think Stephen Green is amply qualified. He has tremendous experience within the group. The unanimous support of the board is a validation of his abilities within the organisation."
Sir John, 64, has been with bank for 45 years, becoming chief executive in 1993 and chairman in 1998. Respected highly and credited with turning HSBC into a global banking powerhouse, he is seen as a tough act to follow.
Mr Green, 57, a lover of Russian literature and the former head of HSBC's investment banking division, has been the chief executive since 2003. Raised in Brighton, he is an ordained deacon who preaches at an Anglican church in London. Mr Green will be replaced as chief executive by Michael Geoghegan, 52, the head of HSBC's UK banking business.Reuse content