Jim Armitage: Succession, not politics will be HSBC's biggest headache

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Last time Douglas Flint was in front of the Treasury Select Committee, the HSBC chairman was being tarred and feathered for failing to spot the dodgy tax work going on at its Swiss private bank. 

For today’s hearing on Brexit, the stocks weren’t as urgently required despite Brexiteer MPs being keen to lob a few cabbages over his Remain stance.

Looking at the way HSBC is structured, it seems to be one of the better-positioned international London banks, both for Brexit and the decline in US import-export trade likely from Donald Trump.

On Brexit, it already has an EU banking licence, unlike its Wall Street rivals currently scrambling to get in their applications. And, unlike most of them, it also has a chunky operation there, employing around 8500 in France. Logic dictates that, if Brexit requires any London-based work to be shifted to the EU, HSBC will simply move a few hundred of its UK-based French staff back home to do it.

On Trump, although any decline in world trade has to be bad for the big, global export-enabling banks (largely HSBC and Citigroup), it’s worth considering who’s going to be the least badly off. 

If the new President scales back US-Asia trade, exporters in the Far East will fill the gap with more business between each other. Who’s best-positioned to bank that trade, having financed trade in the region since 1865? Here’s a clue: not Citi.

One thing that’s less sure is how much of all this Flint will see.

The HSBC boss has long said he will retire in 2017, leading investors to assume that meant by the AGM — traditionally in  April. But his natural successor, Henri de Castries, ruled himself out in November.

The job is hard to fill. It has to be an external appointment, and one who’s an experienced, globetrotting banker on the Rolodex of all the big political and corporate leaders. He or she also has to be a regular at agencies such as the World Bank. Agustin Carstens, highly rated head of the Mexican central bank, was one of the few others who’d fit the bill, but he just upped sticks to run the Bank for International Settlements.

Assuming nobody suddenly jumps out of the snow at Davos, the board has its work cut out to fill the post by the end of this year, let alone April.

Short-changed

While marvelling at the turnaround at Morrisons by David Potts and his team, spare a thought for the many hedge funds shorting its shares for the past year.

In 2016, the stock rose 56%, and today’s profit upgrade added another 4%.

That must hurt even more than it did for finance director Trevor Strain to see his beloved Hammers getting spanked by Potts’ Man City at the weekend.

Source Article from http://www.standard.co.uk/business/jim-armitage-succession-not-politics-will-be-hsbc-s-biggest-headache-a3437171.html

January 11, 2017 |
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