The bankers' banker who put safety first and came out ahead

As they were being told in no uncertain terms who the Government blamed for the collapse, Michael Geoghegan of HSBC was on a world tour, visiting the bank's operations in four continents. He sent along a colleague in his stead.

The bank bosses who did attend were doubly irritated - being put through the wringer was bad enough, but Geoghegan's missing the ordeal only worsened their mood. Their misery was complete when he later went on record to say: "I don't think it is right that the British taxpayer should need to bail out banks ... it sets a bad precedent, but the Government had no alternative."

Geoghegan, 55, and HSBC have had a good war. While the other banks have twisted and turned and, in the end, gone cap in hand to the Government, HSBC, the country's largest bank and Europe's biggest by market value, has remained aloof, seemingly untroubled by the crisis. That's not quite true - the bank is making 1100 investment banking staff redundant, including 500 in Britain. But as the group employs 335,000 worldwide, that is not such a big deal.

Its position is all the more remarkable given that, 18 months ago, it was the first major bank to warn on US losses. Its Household financing subsidiary was slap-bang in the subprime market, extending loans and mortgages to low-income families. They started defaulting and HSBC rang alarm bells.

However, the bank has weathered the storm. It's written off more than £10 billion but has managed to absorb the blow. Indeed, while most of its rivals mull survival plans and in some cases bid farewell to their bosses, HSBC has this week snapped up Bank Ekonomi in Indonesia, doubling its presence in the world's fourth most populous nation.

The contrast could not be more marked - but then the people at the top of HSBC are different from their peers. Their institution has been schooled by a succession of leaders, most recently Sir William Purves and Sir John Bond, into being risk-averse. Of all the UK banks, HSBC is the most cautious.

The irony is that under Stephen Green, the current executive chairman, and Geoghegan, the company has been criticised for being too conservative. In the City, HSBC was viewed as boring by its gung-ho peers. While they made daring acquisitions, engaged in reckless speculation and ran up high loans-to-deposits ratios, HSBC plodded on.

The one blip was Household, but that was viewed as a never-to-be-repeated aberration within the bank. And while it was in subprime, HSBC did not engage in Fancy Dan bundling-up and trading of those loans.

Even when it did try to fast-track the addition of a super-smart investment banking operation, its instincts won through. John Studzinski was hired from Morgan Stanley to kickstart the venture, but the bank was never comfortable with the colossal bonuses and large positions regarded as the norm elsewhere, and the initiative was scaled back.

Green was derided in the City for not being a typical bank boss. One fund manager went so far as to describe the cerebral chairman as "asleep on the job". Activist investor Knight Vinke called on HSBC to change direction and demote Green to non-executive. But in the light of the Government's requirement that both the non-executive chairmen at Royal Bank of Scotland and HBOS should depart, that looks ill-judged.

Likewise, there is no question of the non-executives on the HSBC board not understanding what the employees were up to. The boardroom is stuffed with banking and business heavyweights, led by Simon Robertson, the former head of Goldman Sachs in Europe.

Critical in this safety-first approach has been Geoghegan. He's non-showy, doesn't like public speaking or a high profile. He went to school in Windsor and Ireland, and has been with HSBC pretty much ever since, joining the bank in 1973. He travelled the world for the group, spending 12 years in North and South America, eight years in Asia, seven in the Middle East and three in Europe. He established HSBC in Brazil and received the CBE for his contribution to UK business interests in that country. Along the way, he learned to speak both Portuguese and Spanish.

Married with two sons, Geoghegan became UK chief in 2004 and group CEO in 2006. Away from the bank, he chairs Young Enterprise UK, the body that gives students business experience while still in education. He runs - he's managed the stairs of HSBC's 40-storey tower at Canary Wharf in under 12 minutes - and watches rugby and horse-racing. He also does up old houses and restores antique furniture.

What he is not is like Green. The HSBC chairman is quiet and studious. The chief executive fires from the hip, often speaking very quickly. A senior colleague said of Geoghegan: "He's like Alan Sugar - he talks a load of macho business bollocks and then, after listening to him for 45 minutes, you start to tune in and realise he's pretty sharp."

An ex-HSBC banker said: "Stephen and Michael are total opposites. Stephen is a refined strategist, a good listener, thoughtful and steady. Michael comes from a retail background. He's a very tough manager in terms of setting goals and objectives. He likes to deal with problems as soon as they arise. He's not as confident or as poised as Stephen, he's more of a straight-shooter. Geoghegan is a no-nonsense guy, very good at taking decisions and getting things done." He added: "Mike can be very short-tempered, impatient and confrontational when he wants to be."

The gulf in personality, said the banker, had played to HSBC's advantage. "What we've seen in the past few months is that those banks that have checks and balances have been okay. The Green-Geoghegan combination is a good one - it has built-in checks and balances. It's very timely."

An oft-repeated phrase about Geoghegan is he's "a banker's banker." That means the opposite of those who have recently brought their banks down. He's worked his way up, spent most of his career on the unglamorous, frequently unsung retail side.

Such bankers have emerged from the drama, their reputations enhanced. In the US, the banker who has been making all the running, buying fallen rivals, is Jamie Dimon, chief of JP Morgan Chase, who also grew up in retail banking. "Mike Geoghegan is from the same genre," said one industry insider. "He knows the importance of customer deposits, of always being commercial, of never lending more than you can afford."

John Studzinski agreed. HSBC, said its former investment banking chief, is a bank "where the apple doesn't fall far from the tree where risk is concerned. It's fared well because it's one of the few banks that has executed governance properly ... HSBC embraced the US issue early on, set about managing it, disclosing it and working through it."

There's a familiar message here - to do with a tortoise and a hare.