HSBC broke with tradition by choosing outsider Mark Tucker to replace Douglas Flint as chairman later this year, handing the AIA Group boss the task of selecting a new chief executive for Europe’s biggest bank in 2018.
A one-time professional footballer and insurance industry veteran who once led Britain’s Prudential, Tucker will take over as the bank’s first-ever external chairman on October 1.
HSBC shares were 0.9 per cent higher yesterday by 1150 GMT on news of Tucker’s appointment, as investors welcomed the choice of the Asia veteran as a signal it could intensify its shift towards the region and lower-risk income streams.
“As a top five long-term shareholder, we have been involved in the process and are pleased to see a highly regarded and fresh independent chair for HSBC,” said Sacha Sadan, director of corporate governance at Legal & General Investment Management.
Flint’s departure will end one of the longest-serving management partnerships at a major global bank, as HSBC chief executive Stuart Gulliver is also due to leave in 2018.
“The appointment of a safe pair of hands like Tucker potentially signals an increasing focus on steadier, annuity-style income streams where HSBC has a competitive advantage and which are also set to benefit as interest rates rise,” Benjamin Quinlan of Hong Kong consultancy Quinlan & Associates said.
HSBC has suffered more than most from low global interest rates
Identifying a successor for Gulliver will be one of the first tasks for Tucker, who will receive an annual fee of £1.5 million in addition to standard benefits.
Gulliver, in common with many global bank CEOs, has not clearly nurtured an obvious successor-in-waiting within the lender’s senior management ranks, leaving the door open to a number of his lieutenants or an outside candidate.
Leading internal candidates include Europe chief Antonio Simoes and retail and wealth management head John Flint.
Former Goldman Sachs banker Matthew Westerman is seen by some internally as a candidate, despite overseeing a relatively small part of HSBC’s investment bank. Among external possibilities, Lloyds chief executive Antonio Horta-Osorio is frequently cited by investors.
Tucker’s main challenge will be to oversee a return to profit growth. HSBC’s overall return on equity slumped last year to less than one per cent, compared with 7.6 per cent the year before and far short of a long-term target of 10 per cent.
Flint and Gulliver slashed over 43,000 jobs and sold assets worldwide as they attempted to shrink the group back to profitability amid a tough environment for global banks.
HSBC has suffered more than most from low global interest rates which have made it difficult to invest deposits profitably.
HSBC’s full-year profit fell 62 per cent, far short of forecasts, last month as it took restructuring writedowns and flagged near-term brakes on revenue growth.