In the hotseat: Two HSBC bank logos are displayed on an office building in Mexico City. The bank recently appointed Brendan Nelson as its new chairman. — Reuters
HSBC Holdings Plc’s hunt for a new chair is over – for a few years, at least.
The bank, based in London and Hong Kong, found its candidate on its own board: Brendan Nelson (pic), an independent director since 2023 and former senior partner at KPMG LLP.
Nelson will be upgraded from interim to stopgap chairman. At 76 years old, he doesn’t want to serve a full six-year term.
The appointment underlines the difficulty of filling these roles at major global banks in general and more so at HSBC.
Neither of the reported final two external candidates quite cut it.
Now the bank at least has a longer, less-pressured spell to find a longer-term solution.
That won’t make the search any easier.
The finance skills and experience required by regulators to chair a major bank limit the pool of potential candidates, but HSBC’s demands are even more specific.
It needs political, diplomatic and cultural knowhow that crosses the United States and China. East-West trade and geopolitics loom larger for this bank than any other.
The workload and travel are tough – and the pay isn’t outstanding.
Fancy it? Me neither.
Chief executive officer (CEO) Georges Elhedery is making a virtue out of the bank’s growing role in intra-Asian and South-South trade, and there is a tangible future in that, but HSBC will always be entwined with China and the tensions that its rising power provokes in the world.
The previous chairman, Mark Tucker, was the first outsider to take on this role at the bank – his background in leading insurers in China and across Asia plus stints on the boards of Goldman Sachs Group Inc and the Bank of England made him perfect for the job.
He went at it like a chief executive rather than an overseer of one.
When Elhedery took the CEO role, I wrote that he was really taking on two jobs – with Tucker’s term running out, Elhedery would have to set strategy and run the bank rather than enact his executive chair’s plans.
Elhedery has risen to that challenge, taking more big decisions about where HSBC can compete and where it can’t – and ruthlessly cutting the bankers and operations that aren’t up to snuff.
What Elhedery needs is a chair who will track his moves and challenge him on what he’s doing and why – and call him out where it isn’t working.
But the chair also needs to keep its relationships smooth between a belligerent US and an authoritarian, mercantilist China – as well as with the string of governments, regulators and customers in the Middle East, South and East Asia and, of course, Britain.
The two reported external options were George Osborne, former British chancellor of the exchequer, and Kevin Sneader, currently Goldman’s president of Asia-Pacific, ex-Japan.
Both had some of the skills required but not all.
Osborne’s political nous was clear enough, and he had developed relationships with both the United States and China while in government, although how deep his China ties go is questionable.
And he lacks the finance expertise despite his advisory role at a boutique investment bank.
Sneader has more banking behind him and some of the right Asian relationships following four years at Goldman.
But he was ousted from the top job at McKinsey & Co after failing to properly tackle the fallout from the consultancy firm’s role in the US opioid crisis.
That ought to have counted against him for a job that has previously involved dealing with US punishment for laundering Mexican drug money and demands to pass information on a major Chinese client, Huawei Technologies Co, to US authorities.
It’s not just the rare set of skills and the volume of work involved in understanding a global systemically important bank that makes this a tough job, it also pays little compared with executive roles or equivalent board seats in the United States.
Tucker was paid £1.65mil (US$2.2mil) in fees and benefits in 2024 – a decent sum, but far less than other roles with as much potential legal exposure.
It is no surprise that HSBC spent its history promoting from within.
Some might argue that HSBC should follow the United States route and combine the chair and CEO roles.
But that would go against UK corporate governance rules, and the bank would still need a good enough senior independent director to do essentially the same job as a non-executive chairman.
Ultimately, the answer might have to be HSBC grooming an executive in its own ranks again to make the step up in a few years’ time.
Otherwise, if you know someone with a very particular set of skills and a penchant for regular flights between London, Hong Kong, Beijing and New York, please tell them to send in their CV. — Bloomberg
Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. The views expressed here are the writer’s own.
