For all that banks have been forced by regulation to resemble one another more closely since the financial crisis, one of the joys of covering global finance is to understand that all banks remain distinctive animals. These institutions have their own personalities, forged over long periods of time and by generations of leaders and troops. Most people call it culture.
Too often the people running these banks forget that. I have lost count of the number of times a new hire has been brought into a senior role at a bank from outside. The hire looks good on paper, but from day one something makes you think it might not work out.
I was reminded of this in November when Matthew Westerman, co-head of global banking at HSBC, left the bank.
The news will have come as a shock to the many outside observers who had been tipping him as a future CEO. But for close watchers of HSBC, it was not so much of a surprise.
The rumour mill had been swirling for some time about his future at the bank. His hiring from Goldman Sachs less than two years ago had been heralded as a coup for HSBC – a client-focused, real investment banker who would help its global banking and markets (GBM) division increase revenues by taking more senior roles on event-driven financing, whilst taking a more ruthless approach to winning business from clients who valued HSBC’s other services in traditional banking and markets products.
Westerman set about trying to shake up what was often regarded as a rather old-fashioned approach to client relationships. Senior bankers who had been at the firm for some time left. Those that remained were pushed much harder than before, and constantly assessed and monitored.
And all of that sounds eminently sensible on paper, but it did not fit with HSBC’s culture. The mood in global banking went from too cosy to too caustic. In recent months, the message from some loyal HSBC staff was that while Westerman had rightly come in to shake things up, at some point a confrontational approach that some claimed bordered on bullying needed to be replaced by a more consensual one.
That internal view of Westerman by some contrasted with the views of supporters and clients, who saw a driven individual who could be charming, witty and was ferociously intelligent.
Other factors came in to play. Westerman took personal charge of making sure HSBC did not miss out on lucrative mandates it had failed to leverage its relationships into in the past, but the roster of trophy mandates has largely failed to materialize.
HSBC bankers still dine out on their work for ChemChina on its more than $40 billion takeover of Syngenta as an example of its new capabilities – but that deal was announced in February 2016, even though it was completed a few months ago.
The big hires expected also largely failed to happen – Ray Doody from JPMorgan to run leveraged finance was one of the few outsiders took note of – although Westerman was keen to let people know there were some talented bankers worthy of promotion within HSBC.
|Samir Assaf, HSBC|
Friends of Westerman say the impending departure of HSBC CEO Stuart Gulliver meant the writing was on the wall. Although he reported to chief executive of GBM Samir Assaf, Westerman was seen as a Gulliver hire.
“I guess they’ll now go back to the old ways,” says one friend. “Any chance they had of being a proper investment bank is gone. It will take a long time for people to take HSBC seriously again.”
After a short period of transition, Robin Phillips will assume sole responsibility for global banking, although he might well be joined by another co-head in due course.
A memo announcing Westerman’s departure made it clear this was the end of a relationship. Assaf praised Westerman for leaving the business “better placed to serve our client base with the products, advice and services they need.
“He and Robin Phillips have together driven improved financial and market share performance and reinvigorated our approach to collaboration in global banking and markets, as well as across commercial banking. In addition, Matthew’s stewardship of the Accelerated Female Leadership programme has been a meaningful part of his contribution to HSBC.”
Both Westerman and the sponsors who brought him to the firm would have hoped and expected him to eventually leave a much broader and deeper legacy than that.
In the end, the cultural clash just proved too much.
One HSBC insider said: “This is an institution you can’t simply bend to your will.”
Gulliver, of course, knows this. A lifelong employee of the bank, it took him at least five years to make his mark as chief executive. Before that, he had witnessed first-hand another failed clash of cultures, when John Studzinski had joined him as head of HSBC’s investment bank from Morgan Stanley.
Those lessons would be well heeded by Mark Tucker, the sometimes abrasive outsider who has joined as chairman of HSBC and is expected to want to make his mark on the bank quickly.