Is HSBC’s chair hunt really over?
Safe, but surprising – that was the verdict across the City as Britain’s biggest bank unveiled its new chair after a twist-and-turn search.
Brendan Nelson will take the post at HSBC, succeeding Sir Mark Tucker, whose exit in September left the bank without a permanent chair for weeks.
Except for Nelson. Indeed, the seasoned accountant who will chair HSBC has been a member of the bank’s board since September 2023 and stepped in as interim chair in October.
The move to drop the ‘interim’ label from Nelson’s role triggered head scratching across the City, despite his extensive CV spanning BP, Natwest and KPMG. It was the latter where Nelson spent over 25 years of his career, after becoming a partner in 1984 before rising to Vice Chairman nearly two decades later, a role he stayed in until his (first) retirement in 2010.
Still, Nelson is being framed across the sector as a short-term custodian as opposed to a shrewd admiral who will help navigate the ship through choppy waters amid chief executive Georges Elhedery’s radical strategic overhaul.
“Undoubtedly Nelson is a strong chair but it feels like a temporary fix given the challenges the board has seemingly faced in securing a suitable external candidate,” John Cronin, banking analyst at Seapoint Insights, told City PM.
The contenders
The role of a chair is to “challenge” the top boss, according to Elhedery.
Whilst tapping Nelson has been viewed as “sensible,” a number of names were floated for the role, making the appointment “unexpected,” William Howlett, financials analyst at Quilter Cheviot, told City PM.
This included Goldman Sachs’ top boss in Asia Kevin Sneader, who may still be patching wounds from his ousting from the top role at the world’s largest consultancy firm, McKinsey. The company’s 650 senior partners voted for Sneader to exit following a number of crises, including the fallout from its aggressive selling strategy for OxyContin maker Purdue Pharma.
Elsewhere, former Chancellor George Osborne emerged as a surprise contender for the post.
Over a decade ago, Osborne gave a speech hoping for a “golden era for the UK-China relationship”. In his Chancellorship, Osborne came under fire for accepting Chinese investment in UK infrastructure. But the Asian focus is a message bound to resonate with Elhedery who has pledged to “double down” on business in the region.
“Inevitably, there will be some questions about the depth of relationships with Asia with HSBC straddling the geopolitical fault lines between the US and China,” Howlett said.
Still, Nelson’s formal appointment does bring to a close the near year-long search by the banking giant for a replacement to Tucker even if it wasn’t the preferred landing spot.
“It is probably fair to say that Nelson was not top of the list of permanent candidates, otherwise there would have been no need to appoint him as an interim successor,” Gary Greenwood, analyst at Shore Capital said.
Nelson the caretaker
But questions raised from Nelson’s appointment may be answered by the new chair’s own wishes to not be in the role long-term.
“[Nelson] expressed the desire not to [be chair] for six to nine years given the stage of his career,” Elhedery said on Tuesday, ahead of his permanent appointment going public.
The bank chief did state that whilst Nelson did not want to serve the typical six to nine years term, he had agreed to stay “for as long as it takes until the board and the nomination committee identify the right chair”.
It once again suggests Nelson has embraced the role as substitute caretaker, though without an official finish line in sight.
Hours after the 76-year-old’s permanent position was made public, chief executive of the Financial Conduct Authority Nikhil Rathi was asked at a conference whether he “thinks about age when approving someone” for top roles.
“We look at competence,” Nikhil Rathi said amid chortles from the audience.