Was Matthew Westerman simply too much for HSBC?

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Well, it was sort of fun while it lasted. After nineteen months at the helm of HSBC's global banking group, the thrusting ex-Goldman Sachs banker Matthew Westerman is unexpectedly leaving HSBC.  Before bonuses are paid to boot.

The immediate reason for Westerman's exit isn't clear. It might have something to do with the fact that he wasn't chosen to be CEO. It might also have something to do with the fact that Westerman's way of doing things didn't fit well with HSBC's.

Before joining HSBC, Westerman spent nearly 16 years at Goldman Sachs, where he traveled the world as global head of equity capital markets, head of the investment banking division in APAC, and chairman of investment banking for Europe. When he joined HSBC, Westerman had a mandate to shake things up. And shake things up he did.

First came the firings. Eight months after arriving, in January 2017, Westerman setting about clearing out some of HSBC's cadre of long-serving investment bankers, 100 of whom went in January 2017. Exits have continued throughout the year, including, recently, Luis Galeano, the former head of HSBC's consumer group for the Americas.

While there have been exits, however, there has also been a lot of hiring. Under Westerman, HSBC has brought on an impressive roster of senior investment bankers. They included: Ray Doody, as global head of leveraged and acquisition finance, who joined from J.P. Morgan in January; Alexis Maskell as global head of financial sponsors, who joined from Deutsche, also in January; Paul Cahalan, as head of EMEA leveraged and acquisition finance,who joined from Deutsche Bank in July; Chito Jeyarajah, as co-head of ECM for Asia Pac, who joined from GS, also in July; Rob Ritchie, as co-head of global banking in the UK, who joined from GS in July too; Martin Zoll, who joined from Goldman Sachs in August as global co-head of strategic equity and financing; and Nick Bevan, who joined from Deutsche in October as global co-head of strategic equity.

These are Westerman's men. And they will not have come cheaply. Eight hires at that level (plus various underlings) will easily have cost HSBC £10m, and more when you consider that their previous bonuses will have been bought out. While all will have been on guaranteed packages for this year, they now face an uncertain future when it comes to their compensation in 2018 and beyond.

Nineteen months isn't much time in which to make a difference, but hiring aside, Westerman does seem to have had some impact at HSBC. Insiders point to the fact that the bank has had three joint global coordinator (JGC) roles on UK IPOs this year including the planned IPO of TMF Group, which subsequently became a sale to CVC Capital Partners, and the floats of Arqivar and Bakkavor (although these were subsequently pulled). HSBC was also the lead advisor to ChemChina on its $43bn recommended offer Syngenta AG, and the joint global coordinator of Wind Tre S.p.A's €10.7bn financing round. Insiders say Westerman's presence helped win these deals.

While Westerman had his achievements, however, he also came with aggravations. HSBC's cosy cabal of long-serving bankers was shaken up by Westerman's more "robust" approach.  He introduced a system for monitoring what his bankers were up to.  He allocated the HSBC bonus pool far more unequally, with top performers getting a higher proportion than usual. And he dumped all those he didn't like.

None of this is likely to have enamoured him to HSBC's existing bankers, and it's therefore telling that Westerman is effectively being replaced by his predecessor, Robin Phillips, who knows how HSBC works after joining from Citi in 2004. The boat that was rocked will now be stablilized.

Even so, headhunters who know Westerman and who've consoled his rejects, say it's unfair to presume that he's a 'difficult character.' "He has a very clear idea of what he wants to do, and he does it," says one. "- You'll always upset some people when you have that approach, especially at a bank like HSBC." Another says that negative opinions about Westerman's management style should not be taken at face value. - "You will always find people who say that these high-achieving bankers are difficult to work with," says the head of an investment banking search boutique. "Westerman is a tough task master, but he's no worse than a huge number of other very senior bankers. If you're good yourself, you'll say he's a great manager. If you're not, you'll complain - but this is as likely down to your own shortcomings as to anything else."

This is confirmed by senior bankers who worked with Westerman at HSBC. "Those of us who came from bulge bracket banks are used to his style," says one. "But he certainly ruffled a few feathers. Even so, his exit is a big surprise."

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Photo credit: hsbc by Nick Garrod is licensed under CC BY 2.0.

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