UK’s Biggest Bank Confirms Changing of Guards

By Caroline Dobson
Caroline Dobson
Caroline Dobson
September 28, 2010 Updated: September 28, 2010

[xtypo_dropcap]S[/xtypo_dropcap]peculation about HSBC Holdings Plc’s chief executive's role has been put to rest, after the company announced that Stuart Gulliver would become the new head of the group’s investment bank by late December.

Gulliver is currently HSBC’s head of investment banking and was the bank’s highest paid employee in 2009 with a $15 million package. He will replace Michael Geoghegan as CEO.

HSBC confirmed that Douglas Flint, who joined the bank in 1995, would be chairman. He is currently the finance director. Flint was the favored choice because the directors valued his ability to navigate the regulatory pressure of decentralizing the power of big banks from the British coalition government.

“It is a privilege and I am deeply honored to become chairman of HSBC,” Flint said in the statement. “Our industry is in the midst of fundamental change, which will define how banks operate. At the same time we need to restore trust in the banking industry by learning from mistakes made in recent years.”

“HSBC is committed to contributing in every way it can to this process. I am particularly indebted to Stephen and Mike for all they have done for HSBC during their tenure, and am looking forward to working with Stuart in our new roles.”

Geoghegan’s departure is scheduled for March 2011 where his role will become of an adviser. The controversy surrounding the reshuffle is due to Geoghegan allegedly threatening to resign if he was not given the chairman position, which was formerly held by Stephen Green. Green will be leaving his post after being offered the role of U.K. Trade minister in the coalition government.

"I never went out of my way to be chairman. It's been historical at this company that the chief executive goes on to be chairman but you have to be asked and the reality was I wasn't asked. Another person was asked, it was obvious it was going to be Douglas," said Geoghegan.

Geoghegan had worked at HSBC for 27 years. Although he is renowned for giving out his bonus payments to charity, valued up to $6 million, his golden handshake will be at least $35 million. He held the position of group chief executive since March 2006.

The bank has defended Geoghegan by stating that "it is nonsense that the group CEO threatened to resign unless he was appointed chairman. The suggestion is offensive to Mike and to the company."