Gulliver’s exit to test incoming HSBC chairman

Stuart Gulliver has told the HSBC board he will quit as chief executive next year, making the search for his successor a priority for Mark Tucker, who has decided to leave Asian insurer AIA to become the bank’s chairman.

The appointment of Mr Tucker was announced before the Hong Kong market opened on Monday by AIA and HSBC, which first approached the insurer’s president and chief executive last summer.

AIA said its new chief executive would be Ng Keng Hooi, its regional chief executive, who joined in 2008 after a decade working alongside Mr Tucker at Prudential, the UK-based insurer.

HSBC said Mr Tucker would “take over the responsibility for leading the process of identifying a successor to the current group CEO. This process is expected to conclude during 2018 in order to meet Stuart Gulliver’s expressed desire to retire in that timeframe.”

Shares in HSBC were up more than 2 per cent on Monday afternoon in Hong Kong, while AIA’s stock slid as much as 3.3 per cent.

Mr Gulliver has led HSBC since 2011, reshaping Europe’s biggest bank by selling assets and shifting resources to Asia, where it makes most of its profits, while tightening the lax compliance and governance controls that had led to big fines.

Mr Tucker’s appointment, which is subject to final regulatory approval, to replace Douglas Flint as chairman breaks with the bank’s tradition of promoting insiders to top jobs. He will join HSBC’s board as chairman-designate on September 1 and replace Mr Flint on October 1.

Internal candidates to replace Mr Gulliver include John Flint, who runs its retail and wealth management division, and Antonio Simoes, its European head. But the bank is expected to consider external candidates such as António Horta-Osório, chief executive of Lloyds Banking Group.

Mr Tucker, who has presided over a period in which the insurer’s share price has more than doubled since its initial public offering in 2010, will have plenty of issues on his plate at HSBC. 

The London-listed bank has missed a string of financial targets, is in the process of a hefty restructuring and saw its return on equity fall to less than 1 per cent last year. 

Most of Mr Tucker’s career has been in insurance, including two spells at Prudential. But he did gain some banking experience as finance director of HBOS for one year before it came close to collapse during the financial crisis. 

He has also been a board member of Goldman Sachs since 2012 — a position he will relinquish when he joins HSBC — and was a non-executive director of the Court of the Bank of England for three years to 2012.

Rachel Lomax, senior independent director at HSBC, said Mr Tucker “has a long track record of successful leadership of complex financial services businesses in both Asia and the UK” and praised his “extensive experience and understanding of the regulatory frameworks” in which HSBC operates. 

The approach to Mr Tucker came after Henri de Castries, the former head of insurer Axa who is on HSBC’s board and was shortlisted to be the bank’s next chairman, pulled out to join the campaign of François Fillon, the French presidential candidate. 

Mr Tucker played professional football for Wolverhampton Wanderers and Rochdale while doing a business degree at Leeds university. He later joined the Pru and worked for the insurer in the UK, US and Asia, before returning from a spell at HBOS to become its chief executive in 2005.

A year after leaving the Pru in 2009 he joined AIA as chief executive and is widely credited with helping the largest Asian insurer outside China to recover from the near collapse of its former parent, AIG of the US, in the 2008 crisis. 

“Having been CEO for seven years and, with the company very well positioned to continue its strong growth, I believe now is the right time to make way for a new leader and for me personally to transition to a non-executive career,” he said.

Mr Tucker lives in Hong Kong but is expected to move to the UK when he joins HSBC. Since Mr Flint became chairman in 2010, he has taken extra responsibility for regulation, compliance and conduct. 

The AIA boss, who was paid $15.1m last year, is taking a significant pay cut to join HSBC, where he will receive a £1.5m annual fee, plus benefits and a one-off relocation benefit of £300,000. Mr Flint, who earned £2.1m last year, is expected to seek another prominent chairman’s role, having narrowly missed out at BT Group recently.

A serious cloud still hangs over HSBC in the form of a deferred prosecution agreement signed with US regulators in 2012 to avoid criminal charges for allegedly laundering at least $881m for Mexican drug barons and handling transactions for countries under US sanctions, such as Iran, Libya and Sudan. 

The US Department of Justice is due to decide whether to extend the DPA when its five-year term ends early next year. However, HSBC warned in its annual report that the monitor appointed by the DoJ had “expressed significant concerns” about the pace of HSBC’s attempts to clean up its act.

HSBC shares have gained 50 per cent in the past year but they are almost flat since Mr Flint and Mr Gulliver took charge just over six years ago. The duo point to the almost 38 per cent shareholder return achieved under their watch.