Hong Kong, according to the latest analysis from the Economist Intelligence Unit, is the second most expensive city in the world to live in, beaten only by Singapore, which is in a league of its own. London, on the other hand, has dropped from sixth place to 24th following the Brexit vote and is now 17 per cent cheaper than Paris and on a par with Dublin. Abu Dhabi is in the mid-50s, level with Perth, Amsterdam, Boston and Guangzhou.
Hong Kong and London are the two cities of particular interest to Mark Tucker, the man who has been chosen as the next chairman of HSBC, Britain and Europe’s biggest bank (market cap: US$160 billion). Senior HSBC executives like to keep a foot in both places, one to work in, the other for tax reasons, and it will be interesting to see where Mr Tucker decides to rest his head. The bank’s outgoing chief executive, Stuart Gulliver, domiciled himself in Hong Kong when he was sent out in 1980, but has actually been working out of the bank’s headquarters in London for the past 13 years. Now he’s in trouble with the UK tax authorities who this week won the right to investigate his tax domicile, which has allowed him to keep his offshore income, some of it sheltered in a confidential Panama company, out of the British tax net.
Mr Gulliver’s predecessor, Michael Geoghegan, caused controversy when he moved his office from London to Hong Kong, fuelling fears that HSBC, which owns the former Midland in the UK, would shift its headquarters out of this country. In the event it stayed, much to the relief of the UK authorities, but Mr Geoghegan didn’t, once he was told he wouldn’t be getting the top job.
HSBC has traditionally chosen its chairmen in defiance of best corporate government practice, from inside. The outgoing chairman, Douglas Flint, was the finance director for 15 years and before him Stephen Green served as chief executive after a lifetime with the bank. Sir John Bond joined the bank at 19 and Willie Purves, really the architect of the modern HSBC, and his predecessor, Michael Sandberg, started at the bottom in Hong Kong and worked their way to the top.
Mr Tucker is from a different, and refreshing, mould. Most of his career has been in insurance, including two spells at Prudential, but he did gain some banking experience as finance director of HBOS for one year, only three years before it collapsed in 2008. It did him no harm though: in 2009 he was appointed as a non-executive director of the Court of the Bank of England and he has been a board member of Goldman Sachs since 2012, a position he will relinquish when he takes over at HSBC in September.
Most importantly, he knows about Asia, where HSBC has increasingly been refocusing its efforts after unfortunate forays into the US and other markets. He first worked in the region in the 1980s and fell under its spell from the start. "I loved Hong Kong from the moment I first stepped in it. I think I was immensely excited and caught up in what the opportunity was," Mr Tucker told the Financial Times in 2015.
As chief executive of the insurance group AIA, spun out of the wreckage of AIG in 2010, he has overseen a highly prosperous era driven by growing demand for insurance products in Asia. The City has been having great fun with lurid stories of his early career when he was a professional footballer and studied auditing at PwC while playing football for Wolverhampton Wanderers. He is said to have turned up for his PwC interview with two black eyes from a game the night before and even when he ran the Pru in 2007 he was still playing competitively and liked to head-butt his opponents.
The modern City likes its football and a measure of the respect in which it holds Mr Tucker was marked by the immediate rise in HSBC shares when his appointment was announced – and the fall in AIA. That’s not a bad start.
Ivan Fallon is a former business editor of The Sunday Times and the author of Black Horse Ride: The Inside Story of Lloyds and the Financial Crisis.
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