HKMA needs a new boss: expect an inside job


Matthew Thomas
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The Hong Kong Monetary Authority (HKMA) is looking for a new chief executive to replace Norman Chan later this year, but if history is any guide, don’t expect it to look very far.

Norman Chan, chief executive of the Hong Kong Monetary Authority, is planning to retire on October 1, exactly a decade after he took the job, so the HKMA now has only a few months to find a successor.

Paul Chan, Hong Kong’s financial secretary, is chairing the committee that will look for the next chief executive. The other members of the committee are: Victor Fung, chairman of Li & Fung and a business adviser to the government; Lawrence Lau, a leading Hong Kong economist; Brian Stevenson, a non-executive director of the Hong Kong Mortgage Corporation; and Joseph Yam, who ran the HKMA for more than 16 years before Chan took the helm.


Norman Chan,

They will be competing against another central bank that is on the lookout for new talent: the UK is looking to replace Mark Carney, the Canadian who has run the Bank of England since 2013 and who is due to leave in January 2020.

Will the HKMA be looking at the same candidates that the BoE is considering? That seems unlikely. The BoE’s clear willingness to hire a foreigner for the top job has led to speculation in the UK press about who might replace Carney, with suggestions ranging from Raghuram Rajan, the former governor of the Reserve Bank of India, to Christine Lagarde, managing director of the IMF. 

At the HKMA, expect a company man to be given the job.

The HKMA is in some ways more complex and in others simpler than most central banks. Its room to manoeuvre in monetary policy is practically nil since a peg to the dollar dictates that it must follow the US Federal Reserve’s interest rate decisions. But its role as the regulator for Hong Kong’s banking system forces it to make crucial and delicate decisions. 

Another key function is managing the Exchange Fund, the HK$4.06 trillion ($517 billion) vehicle that the government uses to help keep its currency in line with the dollar.

HKMA’s independence is also questionable. Section 10 of Hong Kong’s banking ordinance gives the chief executive of the city the power to “give such directions as he thinks fit”, adding that HKMA “shall comply with any directions given”. 

This would rule out some foreign economists, for whom central bank independence is sacrosanct. Those with experience at the HKMA are less likely to be put off, in part because they know politicians tend not to interfere in practice. 

Anyone trying to guess who will be the next boss of the HKMA should look at the inner circle. The best place to start is with Chan’s three deputy CEOs 

Could Zhou Xiaochuan, former governor of the People’s Bank of China, fit the bill? He certainly has experience of keeping one eye on his political paymasters. But he may feel the job is a step down from his former throne at China’s central bank. In any case, Carrie Lam, Hong Kong’s chief executive, would likely feel wary about adding more fuel to the fire of anti-China protesters in the city.

That makes it more likely the HKMA will look within for its new CEO, as it did when Chan was chosen a decade ago. In fact, the HKMA’s selection process is remarkably consistent. The last time it was looking – when Norman Chan ultimately got the job – Lawrence Fung was also on the selection committee. It is unlikely that Yam, the first boss of the HKMA, will try to shake things up too much.

So anyone trying to guess who will be the next boss of the HKMA should look at the inner circle. The best place to start is with Chan’s three deputy CEOs – Eddie Yue, Arthur Yuen and Howard Lee.

It is hard to pick between them. Yue and Yuen have both previously been acting chief executive during Chan’s absence. They have also been deputies longer than Lee, who only got promoted to the position in January 2018. But Lee has a crucial brief, taking charge of monetary management and financial infrastructure.


The latter portfolio gives him oversight of fintech and digital payments, an important area of development that can help Hong Kong make the most out of its links with China. Hong Kong is competing with its rival Singapore to position itself as the fintech hub in Asia, becoming just the latest to realize that finance is rapidly moving beyond old-fashioned banking. 

As far as the HKMA goes, Lee is the one helping ease that transition. 

That may be a strong enough trump card to ensure Lee wins a promotion, although it is certainly too early to take anything for granted. There will be tough interviews, as well as chances for each of the deputies to impress, in the months ahead.

The selection committee may well pay lip service to casting a wide net in their search for the next chief executive. But Hong Kong’s financial system works remarkably well. The selection committee will be doing its best to ensure that, after Chan leaves, it remains business as usual.