HSBC 2015 Annual Report Download - page 10

There is now broad agreement that the
implementation of the suite of regulatory reforms
introduced post-crisis has made the financial system
more resilient. Accordingly, public policy priorities
are now focusing on harnessing this greater strength
and resilience to support economic growth, which
we welcome.
Concentration within the current regulatory
agenda is increasingly on new and emerging risks
and vulnerabilities. There is growing industry
participation in dialogue around these emerging
threats, most notably regarding cyber risk, the
changing liquidity dynamics resulting from more
market-based finance and financial exclusion
stemming from excessive risk aversion.
Likewise, addressing the root causes of the
misconduct issues that have bedevilled our industry
in recent years has led to growing cooperation
arising out of the multiplicity of joint working groups
and enquiries that have examined the most serious
failings. 2016 sees the introduction of the new
Senior Managers’ Regime in the UK, which will
reinforce individual responsibility and accountability,
which we welcome.
Also in the UK, 2015 saw further clarity given to
the operation of the ‘ring-fenced’ bank structure
and a welcome announcement of a reduction in
the scope and rate of the bank levy going forward.
It is too early to say whether this amounts to a new
understanding between the industry and the public,
but it is encouraging that the industry is once again
gaining a voice at a time of great economic and
geopolitical uncertainty. We can only fulfil our
essential role if we have regained trust, a fact that
is now fully understood.
Review of headquarters’ location
As we announced last week, the Board concluded
its review of domicile alternatives and decided
unanimously to remain headquartered in the UK.
As we evaluated jurisdictions against the specified
criteria, it became clear that the combination of
our strategic focus on Asia and maintaining our hub
in one of the world’s leading international financial
centres, London, was not only compatible, but
offered the best outcome for our customers and
shareholders. This decision was taken after some
10 months of careful analysis and assessment
of geopolitical, economic, regulatory and financial
factors. Advice was taken from internationally
respected experts and from leading financial
advisers. After considering all the relevant factors,
the Board concluded that having our headquarters
in the UK and our significant business in Asia Pacific
led from Hong Kong, delivers the best of both
worlds to our stakeholders. The completion of this
review closes out one of the 10 strategic actions
set out at our Investor Update last June.
Board changes
Subsequent to the changes announced with our
interim results, we have made further changes to
the Board. Safra Catz stepped down from the Board
at the end of 2015 and Sir Simon Robertson, our
Deputy Chairman, and Rona Fairhead will retire
at the forthcoming Annual General Meeting.
Safra served on the Board for nearly eight years
while Simon and Rona are HSBC’s longest serving
non-executive Directors, having served for close to
10 and 12 years, respectively. Over their respective
periods of service, they have made invaluable
contributions to the Group, not least during the
global financial crisis, for which the Board is
extremely grateful. Their combined expertise and
experience in matters of governance, audit and
risk, remuneration, technology, and international
business affairs has been invaluable to HSBC
and they will, upon their retirement, be sorely
missed. On behalf of shareholders and the Board,
I want to take this further opportunity to recognise
their immense contributions to HSBC.
The Board was delighted to announce the
appointments of Paul Walsh and Henri de Castries
as independent non-executive Directors. Paul
joined the Board on 1 January 2016 and Henri’s
appointment takes effect from 1 March 2016.
Paul Walsh was Group CEO of Diageo plc between
2000 and 2013. Under his leadership, Diageo was
refocused from a diversified food, beverage and
hotels conglomerate into one of the world’s leading
global alcoholic beverage businesses. In building
this position, Paul took Diageo from a largely
European and US business into emerging markets
and to global leadership through the acquisition of
many of the world’s leading brands.
Henri de Castries has more than 25 years of
international experience in the finance industry.
Henri has been Chairman and Chief Executive
Officer of AXA, one of the world’s leading global
insurance and asset management companies since
April 2010 after serving as Chairman of its
Management Board from May 2000.
Their international experience and track record
in leading the reshaping of growing businesses,
including undertaking business portfolio
realignments, will be of great value to the Board as
we address the opportunities and challenges ahead.
‘ There is now broad agreement that the
implementation of the suite of regulatory
reforms introduced post-crisis has made
the financial system more resilient’
HSBC HOLDINGS PLC
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Strategic Report | Group Chairman’s Statement