Ex-Diageo Boss Walsh Lined Up For HSBC Post

Paul Walsh, the former chief executive of Diageo (LSE: DGE.L - news) , is being lined up to join the board of Europe's largest bank as it finalises a decision about whether to move its headquarters from the UK.

Sky News has learnt that Paul Walsh, who currently serves as chairman of Compass, the FTSE-100 catering group, is expected to be named by HSBC Holdings as a non-executive director within weeks.

Mr Walsh's appointment will come as part of an ongoing revamp of the bank's board, with several long-standing directors, including the BBC Trust chairwoman Rona Fairhead due to step down in the coming months.

Sources said on Tuesday that at least one other non-executive was close to being announced by HSBC, and that the unnamed candidate could be named before the appointment of Mr Walsh.

The new board members may arrive in time to play a part in the bank's decision about whether to relocate from the UK, which HSBC said yesterday was now likely to be made next year.

Although a number of tax and regulatory measures appear to have shifted the momentum in favour of the bank remaining headquartered in the UK, its chief executive, Stuart Gulliver, said this week that investors should not draw conclusions from his remark that some of his concerns had been satisfactorily addressed by regulators.

Mr Walsh is said to have been identified as an attractive candidate by HSBC because of his success at managing major consumer brands.

Since stepping down from Diageo in 2013, he has joined a number of boards, and was close to taking both the chairmanship of Formula One motor racing and the presidency of the CBI, the employers' group.

HSBC's share price performance, which has seen its stock trade down almost 20% in London in the last year, has been a source of frustration to management as well as investors given the scale of restructuring already undertaken by Mr Gulliver.

Among the issues facing HSBC as it examines whether to move its domicile is the impact of a move to Hong Kong or elsewhere on its membership of the FTSE-100 share index.

Under FTSE Group rules, companies which are listed on an overseas stock market in the same country as they are domiciled are not eligible for inclusion in its equity indices.

HSBC said in April (LSE: 0N69.L - news) that it would undertake the domicile review amid growing concern about the impact of tax and regulatory changes.

George Osborne announced in his Budget after the General Election that the Bank Levy, which has hit HSBC punitively since it was introduced four years ago, would be restructured.

While HSBC's bill from the Bank Levy will reduce over time, the impact on its overall tax burden remains unclear because of a new Corporation Tax surcharge that the Chancellor has also decided to implement.

On Monday, HSBC announced a surge in quarterly profits, as a tighter grip on costs was aided by a reduction in misconduct-related charges.

HSBC declined to comment on Mr Walsh's appointment.