HSBC bankers learning 'Mandarin for fun' as Far East push grows stronger

Canny executives attempt to gain Chinese exposure as banking giant faces being broken up

HSBC's presence spans the globe but its link with China remains as strong as ever. Reuters.
Beta V.1.0 - Powered by automated translation

The clue was that Georges Elhedery had been learning Mandarin in addition to his native Arabic and the English of global banking.

For the past six months, Elhedery, a senior executive at the top of HSBC, had been absent from his desk. As co-chief of global banking and markets, he’d taken a sabbatical, for his “personal development”. No sooner did he return this autumn, however, than it was announced that Elhedery, 48, would be succeeding Ewen Stevenson as chief financial officer. Stevenson is leaving the group.

The shock was that, until then, many of those around the top of the bank and its investors assumed that Stevenson, 56, was heir apparent to the group chief executive, Noel Quinn. The trouble is, so too, it seems, did Stevenson. He’s said to have sought assurances from the board that he was the next in line and he was not keen to have to wait. Oh dear. It doesn’t pay in the corporate world to thrust and to make demands, to force a board into a corner.

We may enjoy regarding bankers as macho aggressive types who like nothing more than to shove rivals out of their way. Putting the spotlight on them and their apparent suitability for the top job is to focus those with the power to rise to the top. Or more often to come up with reasons why it should not be them. The result is that frequently, it’s the quieter one, the dark horse from leftfield, who emerges.

At HSBC, Stevenson, it seems, overplayed his hand and paid the price. If he’d studied his bank history, Stevenson would have realised there was a precedent. When Stephen Green left as executive chairman in 2010 to become Lord Green and a minister in the UK government, it was widely believed that Michael Geoghegan, the rumbustious chief executive, was a shoo-in. Bookmaker Paddy Power certainly thought so, installing Geoghegan as favourite. But Geoghegan, an HSBC lifer and Green’s right-hand during a period of spectacular growth for the bank, was overlooked in favour of Douglas Flint, the chief financial officer.

Instead of continuing along a path laid by Green and taking the natural step of anointing his long-time Number Two, the board seized theFlint was preferred because he was smoother and he was more regarded by banking regulators. Geoghegan exited with dignity, writing to the board to say he would “remain HSBC’s biggest fan”, but his disappointment was palpable.

Georges Elhedery, Co-CEO of Global Banking & Markets at HSBC. PHOTOGRAPHED OUTSIDE OF THE HSBC OFFICES IN CANARY WHARF, LONDON. FOR THE NATIONAL NEWSPAPER.

Elhedery ticks all the boxes for a global, heavyweight banker. His father was a banker in Beirut, his mother a schoolteacher. He studied at the elite finishing school for would-be star managers, the Ecole Polytechnique in Paris. A spell at a French public sector bank was followed by Goldman Sachs and Paribas, before he joined HSBC in 2005.

He’s got the sporting, daring spirit: snowboarding and holding a pilot’s licence. He’s a polyglot to boot, fluent in Arabic, French, English, German and Spanish.

Which is why adding Mandarin Chinese to that list should have given a hint. According to one colleague, “he just did [Mandarin] for fun.” Of course, he did.

Which begs the question, why of all languages did he choose that one? Why not Russian or Italian, “for fun”?

The answer might have something to do with the fact that HSBC relies on Asia, especially China, for 70 per cent of its profits and Ping An, the Chinese insurer and its largest shareholder, is calling for the bank to be broken up and the Asian arm separately spun-off.

Having someone in the financial top post, possibly the very highest in due course, who can get by in mandarin and display requisite respect and courtesy by speaking to the Chinese at least some of the time in their language, would, right now, pay dividends. It shows intent and seriousness, a willingness to bridge the divide.

For HSBC, nothing has been as fraught as its own identity and relationship with China. It’s been the bugbear of numerous phalanxes of bank bosses down the years: is the group China-centric with an international outlook or international with a heavy concentration on China?

When Hong Kong was a British colony, it did not matter so much. HSBC was a company that grew up out of Empire and was run along colonial, militaristic lines. Its international managers were “officers”, they were single, non-university educated males who shared accommodation called “chummeries” that were akin to the officer’s mess in the army. They did not go on holiday but on “leave”. As recently as the 1980’s, they were supposed to seek the chairman’s permission to marry.

HSBC was known in banking circles as the “Honkers and Shankers”, in reference to its roots in Hong Kong and Shanghai. Then came handover to Beijing and HSBC moved its headquarters from the spectacular landmark building on Hong Kong harbour for one of the towers at Canary Wharf in London.

Quote
Emotionally and commercially, however, the draw has always been back to the Far East, to China.

The bank switched outlook, too, under Green determinedly setting out to become the biggest bank in the world. This led to major acquisitions of banks and financial businesses across the globe, in regions where hitherto it had not been concentrated.

Emotionally and commercially, however, the draw has always been back to the Far East, to China. That’s come to the surface repeatedly amid speculation the head office would return to its original Hong Kong home. Now, comes Ping An.

So far, HSBC has rebutted the main Chinese argument that the Asian side would prosper even more if it was not held back by the rest of the world. The counter is that the Asian bank would become AN Other Asian bank, akin to a Standard Chartered, without the international financial clout and reach that being part of the bigger, wider HSBC provides.

The pressure, though, is relentless and the Chinese do not play a short game. Enter a new broom to provide a smoother approach.

Like several of his top tier colleagues, Elhedery has not worked in Asia for the bank, he’s not been based there – a bone of contention with Ping An, which has added to its litany of complaints the one that senior HSBC executives lack sufficient Asian experience. He does, though, speak Mandarin, which can only help.

Chris Blackhurst is the author of Too Big To Jail – Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan)

Published: November 08, 2022, 5:32 PM
OPINION