HSBC chief executive Michael Geoghegan is to step down by the end of the year in a major boardroom shake-up, the banking giant said today.
Mr Geoghegan will be replaced by Stuart Gulliver, who is head of the group’s investment banking operation, while Douglas Flint, the bank’s finance director, will take over as chairman from Stephen Green, who recently quit to become Minister of Trade and Investment in the coalition Government.
The announcement follows a week of speculation over a boardroom power struggle and rumours that Mr Geoghegan threatened to resign unless he was promoted to chairman.
Rumours have been swirling over the chairmanship at HSBC since Mr Green announced his departure a fortnight ago.
Earlier this week, HSBC dismissed speculation that Hong Kong-based Mr Geoghegan had threatened to resign unless he was promoted to chairman as “nonsense” and “offensive”.
Mr Geoghegan, who joined HSBC in 1973, had been seen as one of the favourites for the role, particularly as HSBC has a history of promoting its chief executive to the chairmanship.
But the bank tonight confirmed the position was going to Mr Flint, who joined HSBC in 1995, and will take up his new role on December 3, following the conclusion of the bank’s board meeting.
Mr Flint, who will leave the BP board as a result of his appointment, will receive an annual salary of £1.5m and an allowance equal to 50% of his salary to fund personal pension arrangements.
Mr Flint paid tribute to Mr Geoghegan upon the announcement and added: “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.”
Mr Geoghegan will step down as chief executive on December 31, but will remain in an advisory role until March 31.
The position of chief executive will be taken by Mr Gulliver, who joined the company in 1980 and has held key roles in the group’s operations worldwide. He will relocate to Hong Kong to assume the role.
As his departure was announced, Mr Geoghegan said: “It has been a career that exceeded all my expectations, the foundations of which were taught to me as a young banker by earlier generations.
“One of my greatest responsibilities has therefore been to help identify and prepare the next generation of management and today’s announcement perfectly illustrates the deep bench strength at HSBC.”
Sir Simon Robertson, senior independent non-executive director, who will become deputy chairman, said he led the restructuring process, and added: “I can confirm that Michael has always wanted to do what is right for HSBC and supported putting the new top team in place at an early stage. He has behaved with great integrity throughout.”
The succession saga comes amid a flurry of changes at the top of Britain’s major banks.
Lloyds Banking Group announced on Monday that chief executive Eric Daniels planned to retire in a year’s time, while Barclays recently revealed that John Varley is stepping down to be replaced by its investment banking boss Bob Diamond.