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OPINION

HSBC offers more questions than answers

Georges Elhedery’s move to the CFO role at HSBC has raised eyebrows among observers seeking to decode it. What does it mean for Elhedery, what happened to incumbent Ewen Stevenson, and what does it say about CEO Noel Quinn?

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Georges Elhedery made his name in HSBC’s Middle East operations, becoming CEO for the region before stepping up to two global roles: head of markets from March 2019, and co-CEO of global banking and markets following the mergers of two divisions in March 2020.

He then took a sabbatical, and by the time he returned, things had changed. Greg Guyett, his co-CEO, was seen as having done an excellent job, and three direct reports on the markets side had stepped up with larger and more global remits in the time Elhedery had been away. Bolting him back into the co-CEO role seemed a mistake.

“It would not have been a good use of a skilled and expensive resource for the bank to try to put him back in there,” one insider says.

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Georges Elhedery, HSBC

Making him CFO firmly positions him as part of the bench of candidates to succeed Quinn when the time comes; Quinn has confirmed in subsequent interviews that this was part of the reason for the move. Euromoney understands that there are four figures in the frame internally: Nuno Matos, the chief executive of wealth and personal banking; Barry O’Byrne, who runs global commercial banking; and now Guyett and Elhedery.

Elhedery’s use of that sabbatical is instructive. He spent it in his native France, but mostly in an intensive study of Mandarin. Internally, it is assumed that he did this in order to improve his chances as CEO; HSBC’s relationship with China and Hong Kong is the most pressing matter it faces in the world today, and it remains under pressure from shareholder Ping An to split itself in two partly as a consequence of that geopolitical tension.

Elhedery is considered a good fit for CFO: a smart man who understands risk, is a skilled operator, more of a strategist than a relationship manager, and with the right abilities to transfer to finance.

What’s not clear in all of this is what happened to the CFO he’s replacing: Ewen Stevenson.

Stepping down

A capable and articulate figure, it’s hard to point to any mis-step in the three years since Stevenson joined from RBS in early 2019. He’s 56 – older than Elhedery, who’s 48, but not too old for a run for the top job himself – and he’s certainly not being ousted for doing anything wrong. We know this because he departs on Good Leaver terms and HSBC says, “there are no other matters concerning the resignation of Mr Stevenson that need to be brought to the attention of the shareholders of the company.” The fact that he will remain CFO until the end of the year and depart the bank next April also indicates he’s not some corrosive force angered by being passed over.

Should we read anything into the line that HSBC “will make a contribution towards Mr Stevenson’s legal fees incurred in connection with his departure arrangements”? That’s apparently standard; he’ll be paid out until October but otherwise receives no further payment for termination. Quinn’s language, though, suggests it was HSBC’s call. He spoke of having “taken the opportunity to review the composition of the GEC, with an eye to long-term succession planning… Ewen will therefore step down.”

Stevenson leaves having picked a hell of a three-year stint to serve as HSBC’s CFO, embracing a global pandemic, a US-China trade war, civil unrest in Hong Kong, the return of rising rates and inflation for the first time in a banking generation, and the Russia Ukraine war.

And Quinn? “There is no change to my commitment as a consequence of these people moves.” He says he’s staying.