HSBC’s Long Hunt For Chair Ends With Safe Pair Of Hands At Home

Weeks into his job as interim chairman of HSBC Holdings Plc, Brendan Nelson had a change of heart. 

As the British lender cast its net wide for a successor to Mark Tucker — who departed in September — 76-year-old Nelson wasn’t expected to stay in his temporary role for long. But a short while later, the board member threw his hat in the ring, according to people familiar with the matter. 

On Wednesday, he was confirmed in the job, much to the surprise of some old friends and colleagues, though the appointment was telegraphed just less than 24 hours earlier by Chief Executive Officer Georges Elhedery. In a coded hint, the CEO told the audience at a London conference that the interim chair — Nelson — might be open to staying around for longer.

Nelson has “expressed the desire not to do it for the full six to nine years, given the stage of his career, but will do it for as long as it takes until the board and the nomination committee identifies the right shape for the bank,” Elhedery said.

The seven-month long search for a suitable external candidate has led HSBC right back to Nelson, who’s had a long boardroom career at NatWest Group Plc, as well as BP Plc, where he was viewed as a potential candidate for chairman of the energy giant. He is now taking the seat vacated by Tucker, the hard-charging financier who, for eight years oversaw four CEOs and wielded the kind of hands-on control that’s seldom exercised by non-executive chairs.

Nelson is also taking over at a time when Elhedery, who’s just been 15 months in his job, is making a mark with a massive restructuring, while ongoing trade and geopolitical tensions between the US and China pose challenges to the lender that’s had deep roots in Asia since its founding in Hong Kong about 160 years ago. 

BOE Pressure

Nelson’s appointment follows a somewhat chaotic global hunt that saw HSBC approach some of the biggest names in global business, finance and politics. Pressure had been growing on the board in recent months to conclude the search, with the Bank of England encouraging the company to wrap up the process sooner rather than later, according to people familiar with the situation who asked not to be identified discussing an internal process. 

The Bank of England declined to comment.

The final shortlist for the role included Kevin Sneader, the former global managing partner of McKinsey & Co., and George Osborne, the former British finance minister. Those sounded out for the job also included Ajay Banga, the president of the World Bank, Stuart Gulliver, a former CEO of HSBC, and Naguib Kheraj, the former deputy chairman of Standard Chartered Plc.

Ultimately, neither Sneader nor Osborne were judged to have the background or the qualities the bank needed at this time, people familiar with the board’s thinking said, asking not to be identified discussing confidential information. 

A spokeswoman for HSBC declined to comment for this article.

With Nelson unanimously approved by the bank’s directors as chairman not long after the men had completed their presentations, HSBC is now viewed to have bought itself several years to weigh up a longer-term successor. Nelson will be able to serve a maximum of six years as chair, though some think his tenure could be somewhat shorter given that if he were to stay in the role for that long he’d be in his early 80s by the time he steps down.

“Reports that he won’t serve a full term are not exactly ideal,” said Alex Potter, investment director at Aberdeen Investments.

Executive Team

Nelson inherits a relatively inexperienced executive team. Prior to being CEO, Elhedery was chief financial officer for about two years. The current CFO, Pam Kaur, is just on the cusp of completing her first year overseeing the bank’s books. In the meantime, Elhedery’s radical overhaul has seen HSBC condensed into four divisions, along with the shuttering of several major operations and job cuts in the thousands.

The task then for Nelson is less about a fresh strategic rethink, but more ensuring that Elhedery is successful in bedding in his existing strategy that continues a previous push to reposition the bank increasingly toward faster-growing markets in Asia and the Middle East.

Among industry commentators, including Hong Kong businessman Allan Zeman, one phrase was used several times to describe HSBC’s new chairman: a “safe pair of hands.”

“I’d rather have somebody like him than somebody outside that has to go through a learning curve,” said Zeman, a longtime HSBC client. Alongside a “strong CEO, that’s a good combination,” he said.

Philip Hampton, the former chairman of NatWest, where Nelson was previously a director and head of its board audit committee, was among colleagues surprised by the appointment. He said he imagined that the golf-loving former accountant was more likely to be focusing on practicing his swing than taking on one of the more grueling roles in global banking.

“I do recall he was working hard at his golf handicap, which he’d never had time for before,” Hampton said. “But he works hard at everything. I’d say his colleagues liked and trusted him for his knowledge and calm,” he said, adding that Nelson was “clever, decent, big picture and detail, and serious, but never too far from a smile.”

Hampton’s views are shared by several other finance industry executives who spoke to Bloomberg News, but asked not to be named. 

“Brendan appears to be a safe pair of hands and has good banking experience,” said Potter at Aberdeen.

Different Challenge

At NatWest, Nelson was among the cast of directors brought in not long after the former Royal Bank of Scotland was bailed out by the British government after it came close to collapse during the global financial crisis in 2008. Over his 11 years on the lender’s board, he was a key player in the transformation of the business from a sprawling global financial institution into a largely UK-focused retail and corporate bank.

HSBC presents a rather different challenge to the once-failing RBS. 

“At a time when HSBC is facing significant challenges in navigating increasing geopolitical tensions between the UK, where it is headquartered and Greater China where it derives at least two-thirds of its profits, Brendan Nelson will have his work cut out,” said Sam Goodman, senior policy director at the China Strategic Risks Institute.

Nelson’s appointment provides Elhedery with a chairman with whom he, as well as Kaur, already enjoy a good working relationship. And where Tucker might have been seen as something closer to an executive chair at times, Nelson is thought likely to provide his executives with more breathing room.

“Nelson’s appointment underlines a desire for stability and continuity,” said William Bown, a Hong Kong-based partner at Maven partnership, an executive search and recruitment firm.