What HSBC needs from its new chief executive

In February, months before HSBC announced chief executive Noel Quinn’s surprise departure, a paragraph on page 281 of the bank’s annual report prompted speculation about succession planning.

In it, the committee that oversees pay at the London-headquartered bank said it was concerned about the “competitiveness” of its most senior executives’ packages, and wanted to link pay more closely to performance. 

Could it be, some wondered, that HSBC — chaired by the New York-based Mark Tucker — hoped to hire its next chief executive from the ranks of a US company, where pay is far higher?

If that was the plan, it looks more difficult now. Since Tucker’s own term ends in 2026, insiders argue that it makes sense for him to appoint someone quickly who can start soon and hit the ground running.

High-level outsiders at HSBC, a bank known for its complex structure because of its global footprint, were at risk of what one person who knows the bank well described as “organ rejection”. That instability would be difficult for Tucker, who is already choosing his third chief executive in seven years. On the other hand, an external appointee might take a more radical look at HSBC’s cost structure.

Georges Elhedery has been seen, at least from outside, as Quinn’s heir apparent since being promoted to chief financial officer at the start of 2023. He has been informally mentored by Samir Assaf, who used to run HSBC’s investment bank and is now a senior adviser to Tucker.

But there are others in the frame too. Internal options include Nuno Matos, who runs its wealth and personal banking business, Greg Guyett who runs the global banking and markets unit and Colin Bell who runs its European operations, and was last year appointed to the board of HSBC’s Singapore entity.

On the surface, it might look like a good moment for a new leader to start. HSBC’s shares have recently been trading at their highest level since 2018 and a noisy and disruptive battle with major shareholder Ping An, the Chinese insurer, has calmed down.

But it is a harder task than it seems. HSBC has been buoyed by higher interest rates during Quinn’s term, boosting profits and making it easier to please shareholders with higher dividends. If rates fall or plateau during his successor’s term, that could put pressure on revenues. The fact that costs have been rising more than the bank expected would become a bigger problem in that scenario.

Ping An’s next move is difficult to predict. Its executives were pleased that HSBC raised its dividend and offered a special shareholder payout linked to the sale of its Canada business, according to people close to the insurer. Still, it voted against Quinn’s re-election. Then, after Quinn said he was leaving, it cut its stake in the bank.

Perhaps the biggest challenge will be something that has been a crucial part of HSBC leadership throughout its history but has been getting more difficult in recent years amid China-US tensions: navigating foreign policy.

Diplomacy was not Quinn’s favourite aspect of the role. A commercial banker by background, he was happiest when talking to clients, according to people who have worked with him. They say he enjoyed the thrill of the frantic weekend last year when HSBC agreed to buy Silicon Valley Bank’s UK business.

If Elhedery is a frontrunner he has some advantages on the diplomatic front, according to some insiders — he speaks Arabic, French, English, German and Spanish and can converse in Mandarin. He is also well connected in the Middle East at a time when groups in both the US and China are courting the Gulf’s increasingly wealthy and powerful investors.

But the approach that Quinn outlined in front of UK members of parliament in 2021, when he said the bank was “trying to stay out of the politics of one country versus another”, is likely to come under greater strain during his successor’s term.

Just this week the US State Department announced new visa restrictions on officials responsible for implementing Hong Kong’s National Security Law after a court in the territory convicted a group of pro-democracy activists. It is not clear what HSBC would do, for example, if the US asked it to stop banking a high-profile client but China insisted it continue. The careful relationship-building that prevents that scenario will be a priority.

kaye.wiggins@ft.com