Breakingviews - HSBC chair's AIA move less startling than it seems

Reuters

18 hours ago

MELBOURNE, June 6 (Reuters Breakingviews) - Never get back together with your ex, they say. Departing HSBC (HSBA.L), opens new tab, (0005.HK), opens new tab Chair Mark Tucker is ignoring such advice. He's returning to AIA (1299.HK), opens new tab, where he served as CEO from 2010 to 2017 before joining the UK bank, as head of its board, the $91 billion Hong Kong-based insurer said on Friday, opens new tab. It seems like a backward step. But it's not as startling as it looks.
It's not the cleanest of appointments from a governance perspective: elevating a former boss to be chair is generally frowned upon outside of the U.S., where the practice remains common, as it raises concerns the old CEO might try to exert undue control.
Tucker should be deemed as independent under Hong Kong Stock Exchange criteria, which encourages a two-year gap since holding an executive role. He has been gone for eight years, and current Lee Yuan Siong, CEO since 2020, joined after his departure.
That said, AIA will want Tucker atop the board in part because of the reputation he built at the UK bank for being a hands-on chair willing to shake things up. It won't be lost on Lee for example, that HSBC had four CEOs during Tucker's eight-year tenure. AIA's earnings have grown slightly over the past five years, but its stock is essentially flat over that period - and rival Prudential (PRU.L), opens new tab has been closing the valuation gap.
Tucker's soon-to-be fellow board members might not be able to rest easy, either: half of the 10 independent directors have been there for more than a decade, making the staid roster ripe for change.
What's more curious is why Tucker wants to go back. AIA, while no minnow, is smaller than the $206 billion bank he currently sits atop by earnings, market value, geographic scope and diversity of businesses. That could have served, for example, as a springboard to another global institution, including U.S.-based ones - Tucker at present lives in New York.
But being AIA chair is an appealing role for someone with his experience of and interest in China. Tucker has focused on the region for much of his career, having run the UK's Hong Kong and China-heavy Prudential before becoming AIA's CEO. During his tenure at HSBC, the bank built up substantial operations in the mainland, and Hong Kong is its largest profit centre with around a third of pretax earnings. In January he led the business delegation that accompanied UK Chancellor Rachel Reeves on the government's most important trip to the People's Republic since 2018.
If the stars align, his new role at his old flame could make for a productive relationship.
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