HSBC's move may force StanChart

LONDON: HSBC Holdings Plc's decision to move Chief Executive Officer Michael Geoghegan and three more top bankers to Hong Kong from London may force Standard Chartered Plc to follow its example, money managers and analysts said.

Geoghegan moved to Hong Kong this month, joining Sandy Flockhart, chairman of personal and commercial banking. Standard Chartered CEO Peter Sands, a former British diplomat, said last year he will stay in London.

HSBC is moving the executives to Asia as it focuses on faster-growing emerging markets like China and India, the bank said. The lender reaped more than half of its 2008 pretax profit in Asia, compared with 94 percent for Standard Chartered. HSBC's decision sparked concern in London that more financial firms might follow, jeopardizing the British capital's position as a global financial center.

"There's a slight essence of the colonial for Far Eastern banks to have headquarters in the UK," said Richard Champion, who helps manage $2 billion as head of equities at Principal Investment Management Ltd in London and holds HSBC shares. "The key point here is proximity to your main markets." Moving top executives "must be under active consideration" for Standard Chartered, he said.

'Skeleton staff'

"London is a global financial center, and neutral in relation to our network in Asia, Africa and the Middle East," said Jonathan Tracey, a Standard Chartered spokesman. "We have a number of very senior executives, including two group board members" in Asia.

In December, Standard Chartered announced two additions to its board: Jaspal Bindra, an Indian national, became head of Asia, and Han Seung-soo, former South Korean Prime Minister, became a non-executive director. The appointments would increase "diversity", the lender said at the time.

HSBC is moving executives to Hong Kong. David Fried will become head of insurance, the bank said this week, replacing London-based Clive Bannister, who retires in March. Chris Meares, global head of HSBC's private bank, is moving to Hong Kong from London, as is Antonio Simoes, head of strategy.

"Operationally, Standard Chartered only needs a skeleton staff in London," said Simon Maughan, an analyst at MF Global Securities Ltd in London who has a "sell" rating on the stock.

HSBC has only 25 percent of assets in Asia, even though it traces its roots to the Hongkong and Shanghai Banking Corp, founded in 1865 to finance trade in opium, silk and tea. More than 70 percent of its assets are in Europe and North America.

Standard Chartered, whose history dates to banks linked to 19th century British colonial expansion in Africa and India, now has 70,000 employees and in 2007 opened a 200,000-square-foot headquarters building in the City of London.

"I'm not sure if this would be a sensible thing from a shareholder perspective if they move their head office here," said Bill Stacey, an analyst at Aviate Global in Hong Kong. "With the current CEO and the critical mass of the head office in London" and "an important part of the business in India and Africa, it seems to me unlikely they would go further".

Both banks are considering shares sales in Asia. HSBC plans to raise more than $5 billion through an initial public offering in Shanghai.

Standard Chartered may trade its stock in India through an offering of Indian Depositary Receipts in the second quarter of this year and is "exploring the possibility" of listing shares in the mainland, the bank said in October.

Bloomberg News

(China Daily 02/27/2010 page9)