How HSBC can heal the scars of its CEO battle
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Updates to add graphic.
By Liam Proud
LONDON, Aug 29 (Reuters Breakingviews) -HSBC’s HSBA.L, 0005.HK latest CEO succession drama has been smoother than the last. That’s not saying much. New boss Georges Elhedery and Chairman Mark Tucker still have work to do to strengthen the C-suite and make sure there’s a strong bench of future candidates for the top job at the $160 billion lender.
The London-listed, Asia-focused bank said on Thursday that its retail and wealth boss Nuno Matos was leaving. That’s not surprising, since he was passed over for the CEO job that opened up in April when outgoing boss Noel Quinn announced his departure. HSBC’s board picked finance chief Elhedery in July.
Morgan Stanley MS.N showed last year that it is possible to hang on to senior talent after a CEO switch, by granting one-time $20 million stock awards to two executives considered but not chosen for the top job. But that strategy depends on two conditions that HSBC lacks: the ability to pay vast amount of money purely for retention purposes, and having senior executives who are willing to accept the money rather than seek a bigger job elsewhere. Matos seems determined to spread his wings. HSBC stated that he was stepping down to “pursue other opportunities”.
The process has been less scarring than Quinn’s entry into the top job. That followed the abrupt departure of previous CEO John Flint in August 2019 and a months-long public audition for Quinn, who initially was just an interim CEO. But there are still holes for Elhedery and the board to fill. For starters, Matos’s replacement as retail and wealth boss will be commercial banking chief Barry O’Byrne. But that means there is a future vacancy in O’Byrne’s current position running HSBC’s second-largest business by revenue. Another hole is chief financial officer. Currently, an interim replacement is doing Elhedery’s old job. Finally, there are few obvious internal candidates to eventually succeed Elhedery now that Matos has left.
Elhedery could solve all those problems with two big heavy-hitting external hires, to fill the CFO and commercial-banking vacancies. Citigroup C.N offers a template. Boss Jane Fraser has grabbed key talent to help cement her turnaround of the long-suffering bank. Top hires include JPMorgan’s JPM.N Viswas Raghavan, who now runs Citi’s banking division. Of course, going external would mean breaking with HSBC’s long tradition of promoting insiders rather than poaching from rivals. That might be a good thing. HSBC’s history of messy successions shows that the old policy hasn’t always served the bank very well.
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CONTEXT NEWS
HSBC's CEO of retail banking and wealth management, Nuno Matos, is resigning to pursue other opportunities, the Asia-focused lender said on Aug. 29.
Hong-Kong-based Matos, who joined HSBC in 2015, was among the internal candidates in the running to take over from Noel Quinn as group CEO, before the board appointed chief financial officer Georges Elhedery instead.
Barry O'Byrne, who currently heads the commercial bank, will move to run the retail and wealth management business.
John Hinshaw, HSBC’s chief operating officer is also leaving, the bank said. His job will be split and shared out between a chief information officer and a narrower chief operating officer.
HSBC’s total return under outgoing CEO Noel Quinn https://reut.rs/4dHxCwn
Editing by Neil Unmack and Streisand Neto
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