The View | HSBC will need a ‘Leader’, not just a good banker

It used to be a standing joke in private banking in Hong Kong that if the clients only knew that all they had to do with their money was to buy HSBC shares - and live off the dividends for the rest of their life - every private banker would be out of a job.

That worked for 143 years, but the banking industry changed forever after the near meltdown in the global financial crisis. The banks got bailed out with our money because a financial collapse would cost the population their lifetime savings. But big banks are paying for it now as industry, technology and regulatory changes are creating tough times. Deutsche Bank, the world’s 10th largest, has just lost its two co-chief executives (a muddled concept) for not bringing home the bacon.

Stuart Gulliver of HSBC has shown himself to be a pretty good banker, but good bankers don’t make good leaders – that is something that has to be learned on the job – and it must come from the heart. Bankers too often favour the status quo. They lose big money on pet products that come and go with the fashion of the times. They listen to the self-important noise of their senior bankers and invest in today’s winners – only to find that they are tomorrow’s losers.

As chief executive, Gulliver has done ok – like an opening batsman on a sticky wicket, keeping his end up. He inherited some inglorious issues but a bank as big as HSBC was bound to pick up some of the US$200 billion in bank fines that the regulators have dished out since 2008.

Gulliver is a lifelong banker. More than 30 years with the same bank is an achievement that comes to few these days. It will not come to the 25,000 people, almost 10 per cent of the staff, who will be made redundant over the next year or so. A leader must have an element of ruthlessness if he is to manage for the benefit of the company and its shareholders.

However, as Machiavelli said, a leader must use ruthlessness deliberately, sparingly and carefully. Fear gives you years; empathy gives you lifetime service. Former British prime minister John Major once sent me a note that made me feel so good that I became a supporter for life.

Gulliver’s travels around his empire – and that of his strategists – has determined that The Bank’s focus will be towards Asia not Europe. It might be a good thing to sell the low-profit Brazilian and Turkish banks but he needs to be aware that bankers have a nasty habit of fighting the last war. If HSBC has only just discovered that Asia is growing faster than Europe, you have to wonder where they have been for the past 35 years.