Leadership Changes on Deck Across Major Banks

Trends are common in the management of banking institutions – for a while, all the major banks were headed by retail banking veterans. As firms began to realize how small the margin was in those businesses, the shift was made to expats for Fixed Income Trading desks, which exists to this day. Now, a clear new trend is underway – at least in Europe: Investment Banking veterans are being appointed to the top role.

Bob Diamond was elevated to Chief Executive at Barclay’s (NYSE: BCS), and the recent announcement that Stephen Green, Chairman of HSBC (NYSE: HSBC) is leaving to become U.K. trade minister leads to the possibility that investment bankers will soon be running all of the biggest banks in Europe. As evidenced in “Too Big to Fail”, Diamond was part of a small group of investment bankers who dealt with the financial crisis of 2008, and helped reshape the industry in the process.

The picture is similar across most of Europe. At Deutsche Bank (NYSE: DB), the former I-banker Josef Ackerman has been leading the firm for eight years, while Anshu Jain (another investment banker) is set to take the helm in 2013 when Ackerman steps down. When UBS (NYSE: UBS) was struggling last year, the firm asked former bond trader Oswald Grubel to come out of retirement and right the venerable institution. Also in Zurich, Brady Dougan leads the key local competitor Credit Suisse (NYSE: CS).

At HSBC a successor has not been announced yet, but Sir Simon Robertson formerly of Goldman Sachs (NYSE: GS) has long been speculated to be his replacement. As HSBC has shifted to the east in recent years, some have speculated that Michael Geoghegan may take the reins, the Chief Executive of HSBC since 2006 and Hong Kong stalwart. With the immense size and complexity of HSBC, investors will be clamoring for familiarity, and stability during this transition time. At only 56, he could also be a long term solution, while Robertson may be more short term, at thirteen years his senior.

After the deepest financial crisis in memory, triggered at least in part by the excesses of the investment-banking industry, this is probably not quite what regulators or politicians had in mind. But then again, investment bankers have never been renowned for not getting what they want. With pressures to improve profits, and simultaneously tapping into Asia’s market potential, it is reasonable to assume this hotbed could be providing leaders for years to come. Investment banks may not be popular, and profits may rise and fall with the business cycle, but there is one thing for certain: when times are good, they’re often great. The Board, and investors are clamoring for profits, and the investment bankers may be in the best position to promise this at this stage of the cycle.

Succession plans have historically been a weak point for the major banks – in Sandy Weill’s wake virtually no one stepped up and took the reins of Citigroup (NYSE: C), and a similar issue may be growing and JPMorgan Chase (NYSE: JPM) as Jamie Dimon’s charisma is enormous and rare.  As firms around the world focus on COB plans, perhaps the banks may finally start as well.