HSBC Paves Way For Chairman Flint’s Exit

HSBC is accelerating plans to appoint its first externally recruited chairman after instructing headhunters to begin searching for a successor to Douglas Flint.

Sky News can reveal that Europe’s largest bank, which has a market value of £118bn, has commenced a hunt for new non-executive directors, including one who will be earmarked to succeed Mr Flint, its chairman since 2010.

While there is not yet a formal timetable for Mr Flint to step down, the news that a search is under way comes ahead of next week’s annual general meeting (AGM), where HSBC is expected to face searching questions about its performance.

Mr Flint will step down no later than the 2017 AGM, although the timetable remains fluid and will depend upon the availability of a suitable candidate, insiders said on Tuesday.

The search for new non-executive board members is being led by MWM Consulting, a London-based firm, they added.

Amid intensifying pressure from shareholders, HSBC has committed to recruiting an external chairman, a landmark moment for a company which is this year marking the 150th anniversary of its establishment as the Hongkong and Shanghai Banking Corporation.

The bank has always promoted its chairman from within its executive ranks, a practice which is at odds with UK corporate governance convention.

News of the beginning of the search for Mr Flint’s long-term successor comes two months after the bank was engulfed in renewed allegations of the conduct of its Swiss private bank .

HSBC was pitched into a political and media firestorm by revelations that the Geneva-based unit had helped wealthy clients illegally evade their tax obligations between 2005 and 2007.

A series of criminal and regulatory probes have been launched into the scandal in Argentina, the UK and the US, while French prosecutors last week demanded that HSBC post a €1bn bail-bond to cover prospective fines.

HSBC labelled the French demand “unwarranted and excessive”.

Both Mr Flint and Stuart Gulliver, the chief executive, appeared before MPs last month to give evidence on the issue.

The beginning of the search for the bank’s new chairman is not directly connected to the Swiss tax affair, although some institutional shareholders have in recent weeks urged HSBC to accelerate its succession planning.

Sir Simon Robertson, HSBC’s deputy chairman, has met major investors since the bank posted disappointing full-year results in February.

The need to find an outsider for the post comes at a time when directors of UK banks are facing a tough new regulatory regime, including the threat of criminal sanctions, as part of Government reforms designed to increase accountability.

Mr Flint is widely respected in the banking sector and beyond. His other roles include chairing the Institute of International Finance, an industry body; an independent role on the UK Government’s Financial Services Trade and Investment Board; and as a British Business Ambassador, a position to which he was appointed by David Cameron.

Nevertheless, the length of his tenure on HSBC’s board has prompted calls for a fresh perspective from some investors.

Prior to replacing Lord Green, who left the bank to become Minister for Trade and Investment, Mr Flint had been its finance director since 1995.

The bank will hope that the search for its next chairman passes off more smoothly than the previous succession process.

In 2010, a boardroom battle was triggered by Mr Flint’s elevation to the role, with Michael Geoghegan, the then chief executive, and John Thornton, a non-executive director, also coveting the post.

The news that HSBC is accelerating its succession planning for the chairmanship may help to quell any revolt at next week’s AGM, although proxy advisory firms such as ISS (Copenhagen: ISS.CO - news) have recommended supporting the re-election of key directors.

HSBC declined to comment on Tuesday.