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Michael Geoghegan, HSBC
Group CEO
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HSBC Group CEO Michael Geoghegan will relocate to Hong Kong from London next February to be “faster on our feet,” as Europe’s biggest bank builds its business in the region. The announcement is seen as an endorsement of Asia’s resilience during the economic crisis, and the strength of Hong Kong as an international financial centre.
Founded in Hong Kong and Shanghai in 1865, the HSBC Group moved its headquarters to London in 1992, as a condition of its purchase of Midland Bank. Now, the bank is re-focusing on the region that accounts for two-thirds of its profits: Asia and the Middle East.
The banking giant has noted “a shift in gravity from west to east,” and says China will be its key focus.
Mr Geoghegan has described Hong Kong as “the most logical place” to work on a China strategy. As an HSBC spokesman added: “Hong Kong is the gateway to China and a major financial centre in Asia. And HSBC already has a home here: HSBC is the leading bank in Hong Kong and the leading international bank in China. It is the ideal location for our Group CEO to drive the continued development of our business in the region.”
Right Decision
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HSBC Group CEO Michael Geoghegan’s relocation endorses Hong Kong as a global financial centre and the gateway to the Chinese mainland
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Stephen Green, HSBC Group Chairman, describes the decision as “absolutely right for HSBC and entirely consistent with the strategy we set out in 2006.”
The bank adds that it “makes sense to have the Group CEO here, where we see the greatest opportunities for growth, in terms of trade, investment and wealth.” From Hong Kong, HSBC will continue its strategy of organic growth, expanding its network on the Chinese mainland and in Vietnam, Indonesia and India. “And, of course, we remain open to investments when the fit is right, such as our insurance joint venture on the mainland with National Trust, and the acquisition of Bank Ekonomi in Indonesia.”
Observers see the HSBC move as a positive sign. In Hong Kong, Steven DeKrey, Senior Associate Dean, Master’s Programs Director, at the Hong Kong University of Science and Technology Business School, considers the HSBC relocation to be “great news for Hong Kong and a fine investor-confidence builder.
“As a highly respected bank and the darling of Hong Kong investors, as evidenced by the take-up percentage on the rights issue, HSBC’s corporate re-establishment in Hong Kong is a clear and definite signal of the positive future of Asia's growth potential and Hong Kong’s role in it,” he adds.
Iconic Brand
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Professor Kathleen Slaughter, Dean of
Ivey Asia |
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Professor Kathleen Slaughter, Dean of Ivey Asia, sees it as a clear signal of Asia’s global economic power.
“Asia continues to be the stronghold of the world’s economic growth, and Hong Kong has consistently been a key player in the global financial markets. The move is clear recognition that the world economy is moving east and HSBC is in a strong position in this market.
“HSBC has been a source of people development, financial services expertise and solid banking for decades in Hong Kong. The stability of the banking system in Hong Kong is validated with the move to Hong Kong and the focus of the bank’s strategy is reconfirmed.”
Professor Slaughter describes HSBC as “an iconic brand in Hong Kong” and says people will feel it has moved back to where it belongs. “I doubt if there is any place in the world where HSBC is more highly regarded than in Hong Kong. To Hong Kong residents, it’s as welcome as the return of the prodigal son.”
In New York, Knight Vinke Asset Management LLC, which owns HSBC shares, was also celebrating. “We welcome this move, as this is something we have been calling on the group to do since the commencement of our public engagement in 2007,” says Eric Knight, Founder and CEO.
Thumbs Up
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Sir David Brewer, Chairman of the of the China-Britain Business Council, says HSBC’s decision is part
of a bigger trend of companies moving to Hong Kong to do business with the Chinese mainland
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“In London, we see Hong Kong, the leading financial centre in Asia, as a strong partner, and see the move by HSBC as a positive development,” says Sir David Brewer, Chairman of the of the China Britain Business Council. “This sends out a strong message and positions HSBC as a market leader and ready to take part in the economic recovery.”
The former Lord Mayor of London added that HSBC’s decision is part of an even bigger trend. “It’s not just large companies like HSBC; there are lots of smaller firms keen to do business in the market. And if they’re looking to put their toe in the water for the first time, Hong Kong is a good place to start.”
According to Brian Caplen, Editor of The Banker, the HSBC move is a “classic post- crisis decision.”
“For HSBC, it is a kind of no-brainer, as its roots are in Hong Kong and China,” Mr Caplen says. “The scope for expansion is huge, and there is the prospect of a further acquisition in China. Hong Kong remains the obvious choice as a location, given the bank's strong position and history there.”
According to some London media, the “shock move” by HSBC has sparked speculation that other banks, including Standard Chartered, might also turn to Hong Kong as the balance of economic power shifts to Asia in the wake of the financial crisis.
No doubt Donald Tsang, Hong Kong Chief Executive, would welcome any such moves. He says HSBC's decision is “a clear and timely thumbs up for Hong Kong as a stable, reliable and vibrant base for the banking industry.
HSBC operates in 86 countries and territories worldwide, with a global network of more than 100 million customers.
Related links
Hong Kong University of Science and Technology Business School
HSBC
Ivey Asia
Knight Vinke Asset Management LLC
The Banker
