Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

Sometimes, the wrong person for the job has the perfect background.

HSBC Holdings Plc might confront that issue if its approach to Peter Hancock results in the former American International Group Inc. boss being picked to replace Stuart Gulliver as chief executive. That possibility was reported by Stephen Morris and Sonali Basak of Bloomberg News.

A duo of Mark Tucker, the incoming chairman, and Hancock as CEO would give HSBC its first leaders from outside the bank in its more than 150-year history -- and two insurance executives, at that.

Lift Off
After two quarters of shrinking net revenue, HSBC's sales are rising again
Source: Bloomberg

While Hancock left AIG following an unexpected $3 billion fourth-quarter loss, there's a lot to recommend him as HSBC emerges from five years of declining revenue.

The former JPMorgan Chase & Co. fixed-income head would be a useful addition right after HSBC managed to score the first foreign-controlled Chinese securities venture. He would be adept at winning debt deals, just as China opens the door to its huge bond market. And that JPMorgan background carries a lot of weight: Hancock would be the latest in a string of global bank heads from the Wall Street firm, including Jes Staley at Barclays Plc and Standard Chartered Plc's CEO, Bill Winters.

More importantly, he understands Asia, having been raised in Hong Kong, a major source of revenue at Europe's biggest bank by assets. His background would mark a commitment to HSBC's Asian roots, one year after the controversial decision to keep its domicile in London. The Asian units accounted for 74 percent of adjusted pretax profit last year, up from 65 percent in 2014, Bloomberg Intelligence analysts note.

But the negatives. For one, Hancock wasn't an unqualified success steering AIG, which is a far cry from the powerhouse it was before the global financial crisis. 

Still the World's Local Bank
Despite scaling back global branches, retail banking and wealth management remain HSBC's main sources of revenue
Source: Bloomberg Intelligence

And while his three years atop AIG would be helpful in building the insurance operations -- a key growth area -- HSBC remains largely a retail and trade-finance bank.  

An executive with more consumer clout would be better for HSBC's retail-banking and wealth-management division in an era of rising interest rates. That business generates just under one-third of group revenue (and does include insurance products). Trade-finance experience would be helpful, too, as global commerce expands. That can only be good for HSBC, which still counts commercial banking as a mainstay more than a century after was founded as Hongkong & Shanghai Banking Corp. to handle trade between China and Europe.

For these reasons, insiders would be a better bet. The veteran HSBC banker John Flint, chief of retail banking and wealth management and another old Asia hand, for one. Or Asia-Pacific CEO Peter Wong. Or former Goldman Sachs Group Inc. Asia investment banking head Matthew Westerman, a relatively recent hire.

Even HSBC Finance Director Iain Mackay, who joined the bank in 2007, could cheer investors if he made it to the top and ordered a big share buyback. HSBC sits on $10.8 billion of excess capital, of which 63 percent, according to Credit Suisse, remains trapped in the U.S. subsidiary. Mackay made $3.5 billion of repurchases in the past year, boosting the stock.

Whatever the case, HSBC's next chief must do something with all that money, even as rising rates help with net interest margins. Despite a mortgage boom in Hong Kong, Asia-wide growth in home lending was only 2 percent, and the bank's loan-to-deposit ratio is just 68.8 percent.

An insider with the right relationships across the sprawling bank would have an easier time sustaining revenue growth. Some fintech savvy would help, too, in the new world of digital banking. But one outsider at the top is probably enough.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Paul Sillitoe at