Macaskill on markets: The European bank random CEO generator
Freshly empowered European bank chairmen are making perplexing lurches as they search for new chief executives. A random CEO generator might help.
The global financial crisis led to a divergence in bank governance trends on either side of the Atlantic. US banks recovered faster than their European rivals and many firms retained the practice of combining the role of chairman and chief executive.
Entrenched leaders can often pick a successor, as Lloyd Blankfein did when he chose David Solomon to head Goldman Sachs and Jamie Dimon may do if the day ever arrives when he decides that running JPMorgan has become too tiresome.
In Europe, the post-crisis weakness of many big banks led to a consensus that the roles of chairman and chief executive should be split. This was accompanied by the emergence of a new breed of chairman with a mandate to exert closer control over the chief executive, including determining the timing of a CEO replacement.
As with many corporate governance fashions, there are logical reasons for this shift. But the decision-making process of some of these new uber-chairmen is starting to look arbitrary and counterproductive.
HSBC is one example of a bank where a strong-willed head of the board is making apparently capricious decisions in forcing change among the senior executive ranks.