Martin Vander Weyer Martin Vander Weyer

A brief scuffle on the bridge of the HSBC supertanker doesn’t mean a change of course

‘HSBC shareholders should remember that slavish adherence to corporate fashion is usually what gets banks into trouble,’ I wrote in May, in response to whispers that executive chairman Stephen Green was under pressure to make way for a conventionally non-executive outsider.

issue 02 October 2010

‘HSBC shareholders should remember that slavish adherence to corporate fashion is usually what gets banks into trouble,’ I wrote in May, in response to whispers that executive chairman
Stephen Green was under pressure to make way for a conventionally non-executive outsider.

‘HSBC shareholders should remember that slavish adherence to corporate fashion is usually what gets banks into trouble,’ I wrote in May, in response to whispers that executive chairman
Stephen Green was under pressure to make way for a conventionally non-executive outsider. The bank’s board certainly seems to have taken my message to heart, having persuaded its major
institutional investors to accept a reshuffle that offends against every nostrum of corporate correctness — which proves that having $2.4 trillion of assets and no bailout money means never
having to say you’re sorry.

The haste with which HSBC announced the appointments of Doug Flint as Green’s successor and Stuart Gulliver as chief executive added fuel to media talk of a boardroom bust-up. But my sources
tell me much nonsense has been written about this story. Green was in sight of retirement long before he accepted the invitation to become a trade minister at the end of the year, so the search for
a new chairman was already well under way; and since senior non-exec Sir Simon Robertson was in charge of the search he could not himself have been a candidate, though he was widely
‘tipped’. Likewise, some talkative shareholders may have liked the idea of the thrusting former Goldman Sachs partner John Thornton as chairman: Thornton seems to have liked the idea
too, but influential board members evidently did not — and were always likely to stick to the tradition of appointing one of HSBC’s own to the top job.

But Mike Geoghegan — the chief executive who is resigning with a huge pay-off — had ceased to be the favoured son some time ago, as seemed to be confirmed by his office move from London
to Hong Kong last year. Meanwhile, Stuart Gulliver had long been pencilled in to succeed Geoghegan, and the fact that he comes labelled as an investment banker is no cause for alarm, since
HSBC’s relatively modest investment banking arm notched up steady profits under his leadership throughout the financial crisis.

Finally, the choice of finance director Flint as chairman may look a bit more surprising, but he has at least two things going for him. First, his presentational style is already familiar to
institutions and analysts; second, he’s a low-profile, Scottish-born, safe-pair-of-hands numbers man and rugby enthusiast, making him a perfect HSBC cultural archetype. And though it makes
for lively headlines, a brief scuffle on the bridge of supertanker-sized HSBC does not imply a sudden change of course. Business news is often presented as personality drama to make it more
palatable, but as one senior City figure remarked to me this weekend, rather worryingly: ‘In the biggest banks, funnily enough, it really doesn’t make much difference who’s in
charge.’

Blowing the wrong way

Energy and Climate Change Secretary Chris Huhne has been trumpeting the opening this week of the £900 million Thanet Wind Farm, the largest offshore generator of its kind in the world.
‘We are in a unique position to become a world leader in this industry,’ says Huhne — which is a curious claim, since more than four fifths of all the equipment used in British
wind farms is imported from continental manufacturers: the turbines for the Swedish-operated Thanet farm were made by Vestas of Denmark, which closed its only UK factory last year, and the London
Array project in the Thames Estuary, led by German and Danish developers, will have even less British content. Meanwhile, a timely report from the UK Energy Research Centre points out that —
partly because wind itself is so fickle — offshore wind power currently costs £149 per megawatt hour to produce, compared with £97 for nuclear and £80 for coal and gas,
‘and is unlikely to reach parity for at least 20 years’.

In short, wind power is an unreliable and expensively imported energy solution, rather than a home-grown green triumph. Chris Huhne should get serious and face up to the nuclear option.

Biscuits and cheese

United Biscuits was one of Britain’s most prominent companies until it passed into the hands of private equity investors a decade ago. But it still owns an iconic set of brands — the
McVitie’s Digestive and the Jaffa Cake, to name but two — and its sale by its current US and French owners to Bright Foods of Shanghai, which is part-owned by that city’s
municipal government, would be another milestone in the long march towards Chinese ownership of just about everything. Lord (Hector) Laing of Dunphail, the last family chairman of United Biscuits,
held forth in the 1980s, when such sentiments were already old-fashioned, against ‘unpatriotic’ investors allowing Britain’s corporate jewels to be snatched by foreigners. But he
also had a keen eye for new markets, and launched the company’s first joint venture in China, declaring he would die happy if it was ‘to the sound of a billion Chinese mouths munching
Digestives’. In fact, he died in June this year, aged 87, before the twin tides of borderless capital and Chinese consumerism could culminate in a ceremony at which smiling gentlemen from
Shanghai might have offered him a plate of his own biscuits.

Still, at least there’s good news on the cheese front. Exports of British cheeses to Germany were up by 20 per cent in the first half compared to 2009, and to countries outside the EU they
were up 23 per cent. Only the French (down 3 per cent) remain determined not to allow their increasingly bland plateaux de fromages to be sullied by pungent artisan products from this side of the
Channel — which can’t even be found, alongside the Jaffa Cakes, in the sad ‘English’ section of Dordogne supermarkets serving expat residents. The resurgence of British
cheese-making over the past 30 years is a cause for patriotic celebration — and thank goodness strong cheese, especially blue, is still repulsive to most Asian palates. Otherwise the smiling
gentlemen from Shanghai might already have their binoculars trained on the Stilton dairy at Colston Bassett.

Comments