Are we witnessing a shift from succession planning to execution?
The rapid overhaul of personnel in key banking positions poses interesting questions, especially as game-changing technology starts to transform banking, notes Keith Mullin
I've been taken aback these past few weeks with the uptick in the volume of senior executive announcements at the world's leading banks. In fact, given the number of changes over the course of this year, I got to wondering whether they signal some sort of strategic banking sector shift that puts in situ executives whose principal function is to focus on the future rather than fix the ills and the wrongs of the past as we head beyond Lehman+10 years.
Just this year, G-SIBs HSBC, Deutsche Bank, Mizuho and Goldman Sachs have appointed new group CEOs in John Flint, Christian Sewing, Tatsufumi Sakai, and David Solomon, respectively. There were two new faces in the corner offices of G-SIBs BNY Mellon and Sumitomo Mitsui Financial Group last year in Charlie Scharf and Makoto Takashima.
Jay Hooley, CEO of State Street, will make it seven as he steps down this year to be replaced by asset management head Ron O'Hanley. Andrea Orcel will make it eight as the president of UBS's investment bank moves to become CEO of Santander.
Credit Suisse boss Tidjane Thiam's denial that he would run for president in Ivory Coast and would remain at the bank sounded akin to a smooth politician's denial; as slick a presidential campaign message as you'd find anywhere. And with Gary Cohn recently linked (albeit a link that was rejected) with Tim Sloan's job at the helm of scandal-tinged Wells Fargo; speculation is rife. Could we be seeing 10 new G-SIB CEOs in fairly short order?
Further out, Ross McEwan is expected to exit RBS in 2020, with good odds on Alison Rose, the current head of commercial and private banking, taking over.
Outside the G-SIBs, Fani Titi and Hendrik du Toit become joint CEOs of Investec on October 1, while Shemara Wikramanayake is taking over as CEO of Macquarie Bank on November 30. Of course, the CEO slot at Danske Bank is open following Thomas Borgen's decision to quit on September 19 in the wake of the bank's huge money laundering scandal.
At divisional level, there have been some noteworthy changes too. Andrea Orcel was replaced at the helm of UBS's investment bank by two co-presidents: M&A banker Piero Novelli and equity trader Robert Karofsky.
Perhaps more interestingly, Orcel had been seen as the prime candidate to replace group CEO Sergio Ermotti, so his departure will have caused a hiccup in the succession stakes. Although not an urgent one: the 58-year old Ermotti is showing no signs of hurrying towards the exit. Perhaps more to the point, the strategic heavy lifting at the Swiss firm's investment bank is complete so the focus now will be on the continuation of the current strategy.
Those in prime position to replace Ermotti seem to be Tom Naratil, co-president of Global Wealth Management and president of UBS Americas (and former CFO); and Martin Blessing, the other GWM co-president (and former CEO of Commerzbank).
Other noteworthy moves of late include Christian Meissner, head of Bank of America Merrill Lynch's corporate and investment bank, being replaced by Matthew Koder, the group's Asia president (and son-in-law of Canning Fok, Li-Ka Shing's right-hand man).
And the departure of HSBC's global markets head, Thibaut de Roux was of interest. That extraordinary anonymous 'whistleblowing on incompetence' memo supposedly sent by senior HSBC bankers professing a lack of confidence in Robin Phillips and the bank's leadership in banking and markets (and expressing support for former banking head Matthew Westerman's efforts) may yet lead to changes.
Goldman Sachs has surely engineered the smoothest generational shift in recent banking history. With Lloyd Blankfein's succession being resolved by the appointment of David Solomon, John Waldron was president and COO, Stephen Scherr moved to become CFO; Marty Chavez was named vice chairman and co-head of the securities division with Ashok Varadhan and Jim Esposito; while Dan Dees was promoted to co-head the global investment banking unit alongside Gregg Lemkau and Marc Nachmann.
Early this year, JP Morgan Chase CEO Jamie Dimon, named Daniel Pinto, CEO of the Corporate and Investment Bank; and Gordon Smith, CEO of Consumer & Community Banking, as group co-presidents and co-COOs in addition to their existing roles.
Succession execution and planning are definitely in. And regulators are watching like hawks. When Societe Generale deputy CEO Didier Valet resigned in March over Libor-rigging discussions with US authorities, the ECB reportedly harried the bank to find a replacement in case SG boss Frédéric Oudéa was hit by the proverbial bus.
In May 2018, the group named four deputy CEOs that have Oudéa's back even if the board is going to propose at the May 2019 shareholders' meeting that Oudéa be appointed to another four-year term.
What is striking about banking leadership today is that the entire crop of US, Canadian, European and Japanese G-SIB CEOs – with the notable exception of Dimon – have been appointed since the financial crisis. Around a dozen were either appointed in existential crisis conditions, in the wake of scandals, or because their post-crisis restructuring efforts weren't deemed to be effective or quick enough.
We're not entirely through the post-crisis period but it's near its end-phase. What's called for now is a different style of leadership that's focused on the future: not just pushing up profitability as the monetary cycle progresses or continuing to fine-tune business models and product footprints, but presiding over a period of dramatic change in the application of AI, blockchain, Big Data, cloud computing and other technology solutions that will change the face of banking.
As the remaining long-standing bank CEOs reach the end of their terms, we'll be through the current post-crisis fix period. We have yet to have a bank CEO with a tech background rather than a banking background. That has to be a certainty as we head into an increasingly digital future. But for now, it's probably enough for battle-weary executives to head into a period of steady-as-she-goes business-as-usual management.
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