HSBC Musical Chairs, Grow Up Old White Boys!

HSBC Holdings chairman Stephen Green (British descent) resigned from his position to become trade minister for the UK government. That's all fine and dandy. Thus the chairman's position is now vacant.

Michael Geoghegan (British descent), who replaced Green as CEO in 2006, is expecting to be promoted to the chairmanship position. However, rumours are now swirling that he might be passed over for that position and may just remain as CEO only.

The favourite to be the new chairman of HSBC is John Thornton (an American) joined HSBC as a non-executive chairman of its North American unit in December 2008, six months after division pushed the bank into the biggest writedowns in its history. The bank has since set aside more than $58 billion to cover bad loans made by its subprime lender Household International, which it purchased in 2003.


HSBC's chief executive Michael Geoghegan now has threatened to quit if he is not promoted to chairman, as the battle for the top job at the bank intensifies. What kind of crap is this? Michael, you are already CEO of HSBC .... HSBC, what other building blocks in life do you want to tick off your fucking wish list? Having sex with Japanese triplet sisters???

Michael, why are you jeopardising the entire HSBC operations by threatening to leave. Where is the company before self thing? This is all me, me, me ... Its obviously not the salary as the CEO will get paid a lot more than the chairman, so its the power. You had to kowtow to Green before as Green was the ex-CEO before being made chairman, but you are not willing to report to any other person as chairman as none were ex-CEOs before. Why the tight ass attitude after reaching the altitude?

Mr Geoghegan was angered by the suggestion that he might be passed over for the role at Europe's biggest bank during a meeting last week. He was told the board was not ready to give him the chairmanship and he was not happy. The way he reacted, the board would be absolutely right NOT to give him the chairmanship. What a petulant old boy? Probably an only child who still can throw tantrums when he is 56. What next, kick an old lady in her shins when you leave the HSBC building just because you were in a foul mood?

The role of chairman at Asia-focused HSBC opened up when the incumbent, Stephen Green, was appointed Britain's trade minister earlier this month. He will take up his new role in early 2011. The decision about the succession is due to be made at a board meeting in Shanghai next Tuesday.

HSBC has traditionally elevated its chief executive to chairman and Hong Kong-based Geoghegan, 56, would not be happy to see another chairman appointed over the top of him. He would be especially angered if the current favourite, former Goldman Sachs banker John Thornton, won the top job. What is this ... entitlement ... like some knighthood if you serve the correct ministries for the correct amount of time??? Michael probably has this sense of entitlement, which is so archaic. Be a professional, do not threaten .... if you do not like they way you are treated, just resign, be a MAN. Why fuck around pouting like a demented child missing his medication.

Michael, even if you get the chairmanship NOW, what kind of respect will you be getting from your colleagues and staff, what will they be whispering behind your back?



If Geoghegan resigns, the favorite to replace him as CEO is Stuart Gulliver, head of the company’s investment bank.

Talking about being pissed off, now this was reported in one of the UK papers:
"HSBC “will be looking to balance out the board between having a British CEO and non-British chairman or vice versa,” said Colin McLean, who manages £650 million at SVM Asset Management in Edinburgh, including HSBC shares."

What kind of crapula is this? I thought HK shooed away the colonial masters since the 90s. Yes, we still have the Jardines reaping their profits from recycling ill gotten gains from Asia 50-100 years ago, and now has "washed clean" the dirty money to own brilliant companies and buildings in Asia. "LOOKING TO BALANCE between a British CEO and a non-British chairman or vice versa".

B.S. Please turn over your share register and see who are HSBC main shareholders, they are mostly not British anymore. HSBC is an Asian bank with a small far flung operations elsewhere. Why is HSBC like Ye Smokehouse Grill or an old English pub with "members only" sign at the door.

You want to be an Asian and get into the higher echelons of HSBC management ~ first get a fucking British degree, not just any degree mind you, has to be Oxford, Cambridge or London School of Economics ... helps if you are from a top private school and plays cricket or rows well, ok then at least know cricket and rugby well enough to hold a decent conversation. Must like beer, warm beer preferably. Dresses conservatively but from Savile Row bespoke. Finally you must know at least 5 white British dudes (dudes only) who are currently holding positions as Managing Director (SVP) or higher in HSBC or other banks/ securities firms (preferably related as well).

So fuck off with the must have one British as CEO or chairman shit, or we will get Agriculture Bank of China and State Bank of India to take over HSBC. ... Other than that, how was your day?

Important View On Dubai World Factor In Equity Strategy

Well, just as swiftly foreign money came into emerging markets, just as swiftly will they leave, and not even on something direct. An indirect scare out of Dubai seems to be enough reason to take the chips from the table. On Wednesday, Dubai World, the government investment company behind some of the emirate's most ambitious projects, said it was seeking to delay repayment on a tranche of its debt. The company has $60bn of liabilities from its various companies including Nakheel, the property firm behind the Palm Jumeirah, the world's biggest artificial island, and the Nakheel Tower, the world's tallest building at 1km high. It also owns DP World, the ports operator that bought P&O Ferries. Nakheel is due to make a $3.52bn Islamic bond repayment, plus charges, on December 14.

Traders feared that the request for a six-month standstill was a sign that the Dubai Government was struggling with its other debts – and that the full impact of the financial crisis globally may not yet be over. British bank stocks, that are among the most exposed in the world to the Middle East, were hard-hit. Royal Bank of Scotland slumped 7.75pc, Lloyds Banking Group lost 5.75pc and HSBC fell 4.4pc – all three are among nine banks who were book runners on an outstanding $5.5bn syndicated loan to Dubai World in June 2008. HSBC's interim accounts showed that the bank had a $15.9bn exposure to the whole of the United Arab Emirates.

The concerns for UK banks also hit sterling, which fell to its weakest point in a month against the euro and a basket of currencies, while gilt futures leapt to a six-week high, propelled by renewed fears about credit quality. Property shares fell sharply amid concerns of a fire sale of Dubai's UK assets, which include the Grand Buildings in London. Dubai has also been a major buyer of UK property.

The risk of corporate default in Dubai clearly shows that contagion risks have not disappeared and that perhaps the market has turned a little complacent about risk. Foreign money flew out of emerging markets yesterday and the cost of borrowing shot up as investors sweated over the prospect of a state-owned Dubai company defaulting and sending another round of shock waves through the global banking system.

Banks in Europe and North America are heavily exposed to the Middle East, and Dubai in particular, with its $80 billion of debt. The cost of borrowing money increased sharply with the increased risk in financial markets. Credit default swap rates (CDS) rising on debt issued out of the Middle East and emerging markets rose, and borrowing costs on Dubai's five-year loan jumped to 5.4 per cent, up 2.24 per cent in two days.

If you look at the emerging nations' stock market performances it gives you a feel of how quickly Western capital will flow out of these nations on default fears. That said, we have to acknowledge that this is largely not long term funds anyway. These funds will find some obscure reasons to get out, if it wasn't this Dubai World situation, it will be some other obscure factor. Thats part and parcel of the high risk of having carry trades into your system. You can complain when they exit, but somehow the same people never seem to complain when they arrive??!! (ala Mahathir).

If nothing is resolved for Dubai World in the next few days you could expect more of the same next week. Uncertainty will breed fear, in other words. However methinks the risk of contagion is relatively low this time around - plus it came at a time when most equity markets were quite robust, and were actually looking for a reason to correct. This would be a good reason to correct - but I would have to say that its a buy on weakness this time around, rather than a "go for a few months holiday" kind of correction. I think markets should have a few more days of weakness, and a good strategy would be to slowly build up positions.

One big thing which most of the Western media have neglected is the role of Abu Dhabi/UAE in this - many seemed to just gloss over this. Abu Dhabi won't allow Dubai's state-owned companies default on debt payments as the global banking crisis limits their access to funds. Dubai and Abu Dhabi are interdependent and one can't be isolated from the other. Abu Dhabi Investment Authority is the world's largest sovereign wealth fund with assets of between $250 billion and $850 billion, according to the International Monetary Fund. The emirate owns more than 90 percent of the U.A.E.'s oil reserves, nearly 8 percent of the world's proven total.

Take all that into account, the risk of contagion and another credit crunch was low. Because seriously, the Middle East is not the engine of growth or a crucial part of the recovery we are seeing in the global economy. The sums that the affected banks will have to bear are not overly large, they can be written down safely, yes these banks' share prices will take a hit, but its nowhere as bad as the subprime situation.

p/s photo: Haruna Yabuki