Business

The delicious boardroom farce at HSBC

BBC business editor Robert Peston on replacing Stephen Green

The saga of the replacement of Stephen Green as chairman of HSBC is turning into a farce, which is delicious for spectators but humiliating for one of the world's most proper and secretive banks.

I am told by those close to the board that Doug Flint, the current finance director, has been chosen as the new chairman, that Mike Geoghegan, the chief executive, will be quitting, and that he'll be replaced by Stuart Gulliver, the current head of investment banking.

So far, so conventional, you might think.

Well, you'd be wrong.

First of all, it's not at all clear that the Financial Services Authority has given its approval for the changes. In fact, I am informed that the FSA has not yet given permission.

And my guess is that anxious telephone calls are as we speak going into the FSA in the hope that the thumbs up is granted so that HSBC can announce the changes in the morning.

The FSA may concede. But it will hate being rushed into sanctioning a pair of appointments of enormous importance to the stability of the financial system.

Which is not to cast aspersions against Mr Flint or Mr Gulliver. They are both respected bankers.

But there is an argument that promoting an insider like Mr Flint is not the best way to make sure that the executive team is subject to proper challenge and scrutiny.

As it happens, HSBC has a long history of promoting executive insiders to the post of chairman. And the bank has flourished.

However it is at least worthy of debate whether the bank has done well because of its unorthodox boardroom structure or in spite of it.

Certainly a majority of big investors would in general oppose executives being elevated to the position of chairman.

What is also extraordinary is how public - through a series of leaks, to the FT in particular - the battle for the top job has become. At various times, newspapers have reported that the former Goldman Sachs banker, John Thornton, was the front runner, and that Sir Simon Robertson - another Goldman alumnus - was in the frame.

Then there were reports that Mr Geoghegan was threatening to walk in high dudgeon (which HSBC denied).

Oh and Stephen Green's departure wasn't exactly the best kept secret.

None of this probably matters in a fundamental sense.

And it has been profoundly entertaining for those like me who know the shame that must be felt inside HSBC in appearing no more dignified than a football club riven by factional infighting over who should be the next manager.

That said, for all HSBC's success in steering a pretty steady course through the worst banking crisis in 60 years, some would argue that succession planning at such a vast and powerful organisation ought to be a little more orderly.

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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