View from City Road: Local heroes are needed at Midland

Brian Pearse denies any bust-up at Midland, and we should accept his assurances. But by most accounts, the style of Sir William Purves, the HSBC chairman, is authoritarian, developed in a culture very different from a British clearing bank.

In these circumstances, there was very little reason for Mr Pearse to give himself an unnecessary headache by staying past his own retirement age, especially as Sir Peter Walters, his chairman, is off to SmithKline Beecham in the spring. The job has been done and what's left is a role in one outpost of a larger empire.

Furthermore, Sir William, the head of that empire, has just moved his own head office from Hong Kong to a building a few hundred yards from the Midland headquarters. He is making his presence felt.

The two top jobs now go to Sir William and Keith Whitson, Mr Pearse's deputy. Both have impressive CVs, and Mr Whitson was HSBC's general manager in the UK for three years before going to the US to sort out the problems of the (unrelated) Marine Midland subsidiary. But he and Sir William are Hong Kong bankers through and through.

There has been much wrong with the UK clearing banks. But one of the qualities Mr Pearse brought to Midland was an unusual degree of competence combined with a deep knowledge of how these goliaths tick, derived from years as a lending banker.

So the bank is beginning to look short of local experience at the top, especially after the death last year of Brian Goldthorpe, one of the few senior people at Midland out of the same mould.

The banking cycle is turning upwards, margins are falling and there is fierce competition to lend - just the time when local knowledge comes into its own to prevent future problems. Sir William should have resisted the temptation to install himself as Midland chairman. It would have been safer to elevate Mr Pearse.