Global banking giant HSBC has put the cat among the pigeons by naming a complete outsider to the position of Chairman. Mark Tucker, chief of an insurer, has the envious task of revamping an organisation that has tried all known avenues to restore an image that has taken a battering both in terms of reputation and finances. Five years ago it paid a $ 1.9 billion fine for dubious dealings. This year it had to cough up another $ 460 million to US authorities for, again inappropriate behaviour.
Successive Chief Executives failed to live up to their promises of firm action, even though 40,000 jobs were jettisoned globally. Following these and knife-edged reforms that are still reverberating through the system, strategic direction is still not clear.
It is a malady that isn't exclusive to HSBC. German giant Deutsche Bank still hasn't figured out how it will foot the humongous fine that US authorities have slapped it with. Without government intervention it looks nearly impossible, but Ms Angela Merkel too, is having problems figuring out an answer. Similar issues of mismanagement with our local banks have earlier been pointed out by this writer, mainly because the end-result remains the same: bankrupt banks. The solution is also essentially the same; propping up their capital shortfall through funding from scarce resources obtained from tax-payer money.
The difference is that these banks are making efforts to change including heavy handed approach to management inefficiency and negligence. In our case, after an initial situation of being in denial, the shift has been towards damage repair rather than identifying the root cause, addressing it. While the records do show who the beneficiaries of such irregularities are, little is being done to penalise them or put in new measures to prevent irregularly approved loans from becoming bad debt. These numbers continue to grow with no signs of processes to claw back.
One of Mr. Tucker's immediate focus will be to find a new chief executive. With the bank having broken with tradition by overlooking internal candidates for Chairman, it wouldn't be out of place to expect him to look for fresh blood, devoid of baggage.
Perhaps, this is a way forward for us, to look beyond the public sector for strong disciplinarian Chief Executive Officers (CEOs) who can think of no-nonsense out-the-box solutions and drive compliance. For that to happen, discriminatory compliance evaluations have to stop. Just as the Bangladesh Telecom Regulatory Commission's penchant of picking on the smallest lapse on the part of multinational operators while turning a blissfully blind eye to major misdemeanours of Teletalk is unacceptable, the government must move away from preferential treatment of public sector banks and apply laws and rules uniformly.
If HSBC can reach out for innovative solutions, there's a lesson to be learnt.