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HSBC Asia unit head decamps to join ANZ Bank
By Benjamin Scent
Hongkong and Shanghai Banking Corp chief executive Michael Smith will leave HSBC Friday to become chief executive of Australia and New Zealand Banking Group, which will give him a total remuneration package of up to A$12 million (HK$79.1 million) per annum.
Smith, 50, is to take up his new post October 1.
``We see this as an unexpected development for HSBC and as a key loss for HSBC overall, and for its Asian franchise - the core of HSBC,'' Goldman Sachs analyst Roy Ramos wrote in a report Tuesday. ``We also see this as more evidence of the changes and tensions within HSBC, as it arguably expanded away from Asia, diluted its growth edge leading to valuation de- rating, and diluted the internal prominence of its Asian businesses.''
Established in Hong Kong in 1865, the Hongkong and Shanghai Banking Corp is a wholly-owned subsidiary and founding member of HSBC Holdings (0005), now based in London.
Smith, in addition to his role as president and chief executive of the Hong Kong unit - which runs the parent's Asia operations - acts as chairman of Hang Seng Bank (0011), another HSBC subsidiary, as well as chairman of HSBC Bank Malaysia, and global head of commercial banking for the HSBC group.
In a statement to the Hong Kong stock exchange, HSBC confirmed Smith will depart Friday. ``An announcement regarding his successor will be made in due course,'' the bank said.
The British-born Smith joined HSBC in 1978 immediately after his graduation from City University of London. He never worked for any company other than HSBC, except for a two-year stint at UK-based Midland Bank when it was only partly owned by HSBC. Smith then continued at Midland for five more years after HSBC gained full control in 1992. He has been head of HSBC's Asia unit since August 2003.
``Michael is well qualified to take ANZ forward in its next stage of development,'' ANZ chairman Charles Goode said in a statement. ``In his 29 years with the HSBC Group, he has developed an impressive track record across multiple businesses and geographies with extensive experience in retail and corporate banking.'' During his career at HSBC, Smith held senior positions in Hong Kong, Britain, Australia, Argentina and Malaysia and worked in places as diverse as Oman and the Solomon Islands.
``I lived and worked in Australia for five years, and my wife and I really look forward to coming back,'' Smith said in a statement. ``Two of our three children were born in Melbourne.''
In an interview with Bloomberg, Smith agreed the appointment reflects ANZ's strategic focus on Asia. Outgoing ANZ chief executive John McFarlane said earlier the bank may more than double its investments in Asia.
``I've watched the Australian banks for a number of years and have often wondered why they haven't done more in Asia,'' Smith told Bloomberg. ``I really do feel that there is a significant opportunity. I'm very excited by it.''
Melbourne-based ANZ said it will pay Smith a A$9 million signing bonus over three years to compensate him for lost remuneration from HSBC. In addition to an annual salary of A$3 million, Smith will receive a short-term bonus of up to A$3 million a year and a long-term incentive bonus of up to A$3 million in stock a year.
Smith may have soured his relationship with HSBC when he recently pressed - unsuccessfully - for a partial spin-off of HSBC Asia ``to unlock value and impose more capital management discipline on the group,'' Goldman Sachs said in a report. Asia has accounted for 65 percent of HSBC's pre-tax profit increase since 2004.
``The growth of HSBC has been in Asia, and the risk is that part of the reason for that success has just departed,'' CLSA said. ``We also feel that HSBC management is under increasing pressure, while it is only just beginning to deal with its US problems.'' |
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