HSBC finance director Douglas Flint is shaping up as the likely candidate to replace Stephen Green as chairman, according to people close to the bank’s board.
Mr Flint has emerged as a serious contender after the board found it difficult to choose between Michael Geoghegan, the bank’s chief executive, and John Thornton, the former Goldman Sachs banker and non-executive director of HSBC, to fill the role.
The Financial Times reported on Wednesday that Mr Geoghegan threatened to resign following an indication from board members that Mr Thornton might be given the job. Later on Wednesday, the bank denied Mr Geoghegan had threatened to resign over not being given the chairman’s role, describing such talk as “nonsense”.
Nonetheless, three people close to the bank’s board said it was looking increasingly likely that a compromise candidate would be appointed chairman, allowing Mr Geoghegan to remain as its Hong Kong-based chief executive. Mr Flint was the most likely contender, they said, adding that Mr Geoghegan’s threat to go had diminished Mr Thornton’s chances.
Mr Green announced two weeks ago that he would step down as HSBC chairman to become UK trade minister. Sir Simon Robertson, senior independent director, had initiated a search for Mr Green’s successor earlier in the summer. That accelerated a process of succession planning at HSBC that had already been initiated by senior independent director Sir Simon Robertson.
Initially there were two lead candidates for the role of chairman. One faction on the board was keen on Mr Geoghegan being elevated, with Stuart Gulliver, the investment banking head, the favourite to replace him as chief executive.
The other lead candidate, understood to have the support of Mr Green, was Mr Thornton, who has strong credentials in China, a priority growth market for HSBC. Investors favour Mr Thornton as a good foil to Mr Geoghegan, who has been at HSBC for 37 years, as CEO and a heavyweight China-focused banker.
Several investors have spoken about the importance of having a strong non-executive acting as a counterbalance to Mr Geoghegan, while several HSBC executives have countered that the bank should be led by someone who rose through its ranks.
Selecting Mr Flint would be a popular compromise. “He is a senior City figure and is trusted by investors,” said Robert Law, analyst at Nomura.
For others, however, his appointment would be controversial. Elevating a finance director to the chairman’s role would put someone who is currently subordinate to the chief executive in a controlling role, which some corporate governance experts say is even worse than a CEO being elevated to chairman.
There are few precedents for such a succession choice, other than at Deutsche Bank, where former finance director Clemens Börsig is now non-executive chairman.