The HSBC banker suspended for speaking his mind

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HSBC loses control of its climate narrative

Knowing your audience is generally considered good advice. But sometimes it’s not executed well.

Last week Stuart Kirk, HSBC Asset Management’s global head of responsible investing and a former FT journalist, told a room full of people who had gathered to talk about ESG concerns that they should ignore “unsubstantiated, shrill hyperbole” about climate change.

You don’t have to be a climate scientist to figure out how that went down.

On Sunday the FT’s Owen Walker revealed that Kirk had been suspended as a result of his bluntly delivered presentation at the FT Moral Money Summit, titled “why investors need not worry about climate risk”.

While the bank has more pressing issues to address, including its troubles with China, Kirk’s comments have taken centre stage.

The backlash was swift. Environmentalists and other ESG investors have called for Kirk’s head on a platter.

Nicolas Moreau, the head of HSBC’s asset management arm, was one of the first to distance himself from Kirk’s comments.

Noel Quinn, HSBC’s chief executive, took a couple of days to come out with his statement. “I do not agree — at all — with the remarks made at [this] week’s FT Moral Money Summit,” he wrote on LinkedIn this weekend. The lender’s chief sustainability officer Celine Herweijer voiced her own rebuttal on the social media platform.

This may all have come as a bit of a surprise to Kirk. People with knowledge of the event’s planning told the FT that Kirk’s presentation was given the green light internally before Kirk spoke on Thursday.

Details are still murky on how a presentation that has ruffled so many feathers in HSBC’s top ranks had ostensibly made it past its PR team.

Kirk also used his stage time to make several jabs at Mark Carney, the former Bank of England governor and Brookfield’s head of transition investing. “The Mark Carneys of this world have to convince us all that every single one of us is wrong on climate risk. That’s possible, but it’s a big call to make,” he said.

Both Carney and Herweijer are set to appear on a panel at Davos on Wednesday morning moderated by Martin Wolf. DD’s Arash Massoudi is on the ground in Switzerland to listen in on the discussion.

DD’s take is that climate change is important. However, it shouldn’t just be used as a buzzword or marketing gimmick. Kirk has raised important questions about greenwashing and whether companies that appear to be environmentally friendly really are. That’s something worth exploring.

Michael Dell’s OG ‘funding secured’ deal

During their effort to buy technology conglomerate EMC Corporation for $67bn in 2016, a pivotal moment for PC mogul Michael Dell and his dealmaking partner Egon Durban of Silver Lake occurred in the law offices of Skadden Arps.

EMC’s board was meeting at the law firm to vet the takeover bid but was unsure whether they had the cash to close. Dell and Durban’s wild card was JPMorgan Chase boss Jamie Dimon.

“They’ve got the money,” Dimon told EMC’s board, as recounted by DD’s Antoine Gara in his final Forbes Magazine cover story before joining the FT. “We’ll do the whole deal.”

Having the head of the largest bank in America standing behind your financing package is the “funding secured” any dealmaker can only dream of.

Dell and Silver Lake’s gargantuan return on the takeover indicated Dimon made the right call.

Chipmaker Broadcom is in talks to acquire VMware, the crown jewel asset that Dell and Durban acquired when taking control of EMC, in a deal that could fetch the software group more than $50bn.

VMware shares surged about 20 per cent on Monday, putting Dell’s 36 per cent holding at a $17.6bn valuation and Silver Lake’s holding worth nearly $5bn. If Broadcom moves forward, it would cement a big windfall for the duo.

Dell kept VMware independently managed with a 19 per cent stake listed on public markets, but combined the remainder of EMC inside his bigger enterprise technology mothership Dell Technologies.

After selling off non-core assets to pay down debt in November, Dell spun off its 81 per cent ownership of VMware and pulled a $12bn dividend out of the cloud computing company to deleverage.

Net debt at Dell has fallen from $40bn in 2020 to about $17bn presently, as it nears $100bn in annual sales. Michael Dell owns a stake in Dell worth more than $14bn, while Silver Lake’s shares are worth nearly $4bn.

The coup underscores that arcane technological infrastructure companies such as VMware are the big money makers on Wall Street, and where deal activity remains strong.

The executive tasked with enticing IPOs to Hong Kong

Nicolas ‘Gucho’ Aguzin, the chief executive of Hong Kong’s stock exchange, arrived at Davos this week with a cardinal mission: drumming up enthusiasm for foreign investment in Chinese companies.

The challenge is doing it just as China sentiment among global investors is more negative than at any time in recent memory.

It caps a difficult first year in the job for the former JPMorgan banker, who is the first non-Chinese person to run HKEX and does not speak Mandarin.

Total equity fundraising is at the lowest level since the global financial crisis and the market value of HKEX has fallen about a quarter, or roughly $19bn.

Much of the blame can be thrust on HKEX’s over-reliance on listings by mainland Chinese companies, which account for almost 80 per cent of its $4.8tn stock market. Beijing’s zero-Covid and national security measures have shifted mood for global investors, wiping trillions of dollars off the value of the country’s biggest tech companies. HKEX is critically exposed.

On top of that, more than two years of effectively closed borders has damaged Hong Kong’s reputation among international finance as an accessible place to conduct business.

Gucho — a childhood nickname that is even used by his old boss Jamie Dimon — is a firm believer that maintaining capital flows between China and the world is the key to avoid geopolitical tensions escalating into conflicts.

The Argentine-born chief executive spent April in mainland China meeting officials in Beijing, Shenzhen and Guangzhou. He was given a fresh mandate by officials to make sure Hong Kong is “plugged into the international market”, he told the FT’s Tabby Kinder and Hudson Lockett.

It’s a tall order considering the “listing traffic jam” — as described by an executive close to the exchange — that has resulted from deteriorating US-China relations and Beijing’s regulatory crackdown.

Aguzin must also look outside of China and persuade more international companies to list in Hong Kong if he wants to boost the exchange’s fortunes.

HKEX’s failed tilt at acquiring the London Stock Exchange in 2019 under his predecessor Charles Li now looks like a missed opportunity more than ever.

Job moves

• Freshfields has hired Jenny Hochenberg as a partner in its corporate and M&A practice, based in New York. She joins from Cravath, Swaine & Moore.

• Gonzalo Ardura has been promoted to head of investment banking for Spain at Barclays, where he has been a managing director since 2018.

Smart reads

Cloud capital Capitolis, a Silicon Valley start-up that aims to repurpose locked-up capital into new banking products, could revolutionise banks’ role in the financial system, the Wall Street Journal reports. But it requires undoing crisis-era safeguards.

Disorder in the court A landmark EU directive in 2011 was meant to boost safeguards for whistleblowers in Germany. More than a decade on, those who raise red flags in Europe’s biggest economy still find themselves in legal purgatory, the FT writes.

Private equity under fire Buyout firms have used “roll-up” acquisitions to control large swaths of the economy. The top US antitrust enforcer told DD’s James Fontanella-Khan that the practice deserves more scrutiny.

News round-up

Chelsea Football Club sale set for approval after Abramovich meets ‘red lines’ (FT)

Didi investors vote to delist in US in bid to revive China business (FT)

Abu Dhabi’s Borouge secures cornerstone investors including India’s Adani family (Reuters)

Clifford Chance raises pay for newly qualified lawyers to £125,000 a year (FT)

JPMorgan shares leap after bank raises interest income target (FT + Lex)

Binance promoted terra as ‘safe’ investment before $40bn collapse (FT)

Crédit Agricole Italy interested in Banco BPM’s insurance business (Reuters)

Swedish fintech Klarna to cut 10% of workforce (FT + Lex)