Former Stock Exchange chief Furse to chair HSBC ring-fenced bank

HSBC is turning to a former boss of the London Stock Exchange (Other OTC: LDNXF - news) (LSE) to oversee the ring-fenced UK retail bank being created under far-reaching regulatory reforms to be introduced in 2019.

Sky News has learnt that Dame Clara Furse is being lined up as the chairman of HSBC UK, which will comprise the British retail banking and wealth management, commercial banking and global private banking operations of Europe's biggest lender.

The appointment is expected to be announced this week, and could be made as early as Tuesday, according to City sources.

Dame Clara is likely to have to step down from the Bank of England's Financial Policy Committee (FPC), on which she has served for the last three years, as a result of her HSBC appointment, which is understood to have been approved by banking regulators.

A former LSE boss, Dame Clara rebuffed a string of overseas takeover bids for the company before stepping down in 2009.

She (Munich: SOQ.MU - news) has since joined a number of company boards, including Vodafone, the Japanese bank Nomura, and Amadeus, the travel technology group, as well as the FPC.

Her appointment to chair HSBC UK will represent a vital part of the bank's efforts to ensure that robust corporate governance arrangements are in place ahead of the most significant overhaul of British banking regulation for generations.

HSBC's rivals are also in the process of recruiting new independent directors for their ring-fenced arms, a process which has been complicated by new regulatory codes facing bank directors.

Under plans set out by Sir John Vickers' Independent Commission on Banking (ICB) in 2011, UK-headquartered banks holding deposits of at least £25bn must segregate their retail and commercial functions from wholesale and investment banking activities.

The reforms will come into effect in 2019, although the affected banks Barclays (LSE: BARC.L - news) , HSBC, Lloyds Banking Group (Other OTC: LLOBF - news) , Royal Bank of Scotland (LSE: RBS.L - news) and Santander UK (LSE: 44RS.L - news) will be required to demonstrate their readiness from early 2018.

The ICB's report was aimed at preventing a repetition of the 2008 banking crisis, when taxpayers were left with a bill running to tens of billions of pounds to rescue failing universal banks those with both retail and investment banking operations under common ownership.

HSBC has set out an ambitious blueprint for its ring-fenced bank, which will be based in Birmingham, with approximately 1000 staff relocating from its existing London group head office.

The bank's 1000 high street branches in the UK will be rebranded as HSBC UK, after executives considered reviving the Midland name ditched nearly 20 years ago.

In a memo to staff announcing the branding decision last year, Stuart Gulliver, HSBC's group chief executive, said:

"Our ambition is to be the bank of choice in the UK and as a name, HSBC UK will build on the global connectivity and customer trust of the HSBC brand and differentiate us in a competitive market."

HSBC's non-ring-fenced bank, which will comprise other UK-based activities such as its global banking and markets business, will continue to be branded under the existing HSBC name.

Europe's biggest lender, which reports third-quarter results next week, also owns First Direct.

An HSBC spokesman declined to comment on Monday, while Dame Clara could not be reached for comment.