BREAKINGVIEWS-HSBC chair hunt nears predictably subpar endgame

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Liam Proud

LONDON, Dec 1 (Reuters Breakingviews) - The directors of HSBC HSBA.L, 0005.HK are having a uniquely difficult time finding a suitable chair. That's because leading the board of the $240 billion Asia-focused bank is a uniquely difficult job. Filling Mark Tucker's shoes requires geopolitical acumen, banking nous, and a willingness to commit executive-level hours without the pay to match. No wonder the process has been such a slog.

The board will this week hear pitches from former UK finance minister George Osborne and Goldman Sachs's GS.N Kevin Sneader, according to the Financial Times. Neither is perfect. Osborne, for example, hasn't held an executive-level job at a financial firm. Nor is he an expert on Asia, which is HSBC's most important geography.

Sneader ticks far more boxes, as president of Goldman's business in the region excluding Japan. He also led consultancy McKinsey and has lived and worked in Hong Kong, which is the ancestral home of the London-headquartered bank. Still, he's not really a banker in the HSBC sense of the word. The group's key businesses include retail lending, trade finance and commercial banking, which have relatively little in common with advising corporate clients on deals and the like.

It would be tempting to blame this slow and underwhelming search on pay. Tucker's all-in compensation last year was just over 1.6 million pounds ($2.2 million), compared with Colm Kelleher's 5.5 million Swiss francs ($6.9 million) at UBS UBSG.S. Yet that's oversimplistic: Swiss chairs have more formal executive-level responsibilities, in theory justifying the extra money.

Tucker's compensation was much higher than that of many less hands-on chairs, like at BNP Paribas BNPP.PA, Barclays BARC.L and Deutsche Bank DBKGn.DE. In any case, qualified candidates for this level of role tend not to need the money. In reality, the problem is more the mismatch between the level of responsibility and the job title, since HSBC's board heads historically acted more like CEOs. The pay - which sits somewhere between executive and non-executive level - is a function of this unconventional job brief.

The question is what board members like Ann Godbehere, who as HSBC senior independent director is leading the search, can do about all this. UK governance norms make it tricky to put together a UBS-style package, since doing so may require muddying the ground between a non-executive and executive-style role. The other option would be to opt for a more hands-off pick who lacks relevant banking knowledge, which seems to be where things are heading. The apparent shortlist simply reflects that the ideal chair probably doesn't exist.

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CONTEXT NEWS

HSBC's board will hear pitches from two chair candidates in the week beginning December 1, the Financial Times reported on December 1.

The two would-be heads of the board are former UK finance minister George Osborne and Kevin Sneader, who is currently president of Goldman Sachs's Asia business outside of Japan and who used to run the consultancy firm McKinsey.

(Editing by George Hay; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))