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 The
Global Irishman
Wall Street 50 Keynote Speaker
HSBC’s Brendan McDonagh is a new breed of international Irishman.
By Niall O’Dowd
Photograph By: Kit De fever
Just six months after assuming his job as head of HSBC Finance in
North America, Brendan McDonagh volunteered to appear before Congress,
in MarcHSBC’s Brendan McDonagh is a new breed of international Irishman.
By Niall O’Dowd Photograph By: Kit De feverh 2007, to address the
growing subprime mortgage-lending crisis. It was a typical move by the
49-year-old Irishman who has become known throughout his career for a
straightforward type of management, which addresses problems head on.
Like many other banking leaders, McDonagh could have tried to duck and
dive on the issue and refuse to appear at the televised hearings, but
that was not his way. Senate Banking Chairman Chris Dodd was certainly
appreciative.
“We take the situation very seriously and we’re taking strong steps to
correct problems,” McDonagh told the legislators, and his bank directly
proceeded to do that, seeking to ensure above all that a way was found
for homeowners to keep their properties. “Otherwise everyone loses,”
McDonagh notes.
HSBC had gotten caught up in the sub prime crisis after it purchased
Household Finance in 2003, before McDonagh took the top job.
Last year, the company wrote off $11.7 billion in bad debt as a result
of the crisis, but under McDonagh’s management the worst of the crisis
now seems over.
The subprime segment is but a very small part of the global HSBC brand.
Forbes magazine recently rated HSBC Holdings number one in its Global
200 ranking of companies worldwide.
The banking behemoth earned the distinction by showing a phenomenal
annual 26 percent growth in revenues, by having 10,000 offices worldwide
in 83 countries, and by having $2.3 trillion in assets.
HSBC is the little foreign bank that could. It started in Hong Kong in
1865 with just two branches, one in Hong Kong and one in Shanghai,
capitalizing on the trade winds that were blowing strongly between the
Chinese capital and the then crown colony.
At a time when the world center of banking was London, HSBC’s incredible
growth since their modest colonial beginnings has been staggering.
As CEO of HSBC North America (the holding company for all of HSBC’s U.S.
and Canadian businesses; the company serves nearly 68 million
customers), McDonagh has no doubt that the bank has gone from strength
to strength because of its global reach.
In fact, the Dublin native embodies the global nature of a bank that has
managed to bestride the world.
 McDonagh’s
stellar career in banking was foreordained from an early age. Born in
1958 on Dublin’s Northside, as a kid he showed an aptitude for numbers,
which came in handy in the family business.
His father was a butcher who supplied meat to the Guinness Brewery and
the Rotunda Hospital.
“What we did in those days, because my father had a cash business, we
would bring the cash home and I ran a ledger for him and then we would
cash checks for our neighbors who were in the check business and needed
to pay salaries and wages. So we ran a bank out of the dining room in
the evening time,” McDonagh recalls.
It was no surprise when McDonagh took the economics and accounting route
and went to Trinity College Dublin to study business and finance.
Once he qualified and anxious to see the world, he sent his résumé out
to several international banks and waited. It was 1979 and jobs were not
plentiful in Ireland in the pre-Celtic Tiger era.
The best offer was from a vaguely exotic sounding company known as the
Hong Kong and Shanghai Bank in London. His parents were surprised. “They
were a little shocked when they realized it was based in the Far East
and I wasn’t just going over to London for a job,” McDonagh remembers
with a smile.
Thus began the journey from butcher’s boy to HSBC’s top job in America.
McDonagh now oversees one of the top 10 financial services organizations
in the United States, with assets totaling $557 billion and over 40,000
employees.
The journey to the top was one that would include living in eight
different countries and developing deep cultural and business ties on
several continents.
“A lot of us at HSBC have worked in many countries, and that richness of
experience means that you have a deeper understanding, a global
understanding, how things work in, and between, different countries,”
McDonagh explained in our interview, which took place at HSBC’s New York
headquarters on Fifth Avenue. “The foundation for us [HSBC] is free
trade. Globalization, at the end of the day, is good for everybody,” he
says.
McDonagh, who is now based at HSBC headquarters in the Chicago suburb of
Mettawa, Illinois, worked with several developing nations early in his
career.
“In those days we were headquartered in Asia and most of our operations
were in the Far East and Middle East,” he explains.
McDonagh was in Guam for six months. Then he was sent to Brunei, in
Southeast Asia. His first managerial position followed, in Hong Kong.
It was quite an experience.
“We had a very large cash department. It was like mini Fort Knox, and I
was the operations manager.”
Soon after arriving in Brunei, McDonagh met Kenane, an English nurse and
midwife, who would become his wife. The newlyweds set out for Oman,
McDonagh’s next posting, where he had to adjust to the life style of the
Middle East after the years in South Asia.
His globetrotting pace increased when he was sent to Tokyo after Oman.
He enjoyed his time in Tokyo enormously. It was the first of two
postings in Japan – the second came a few years later, when he was sent
to Kobe.
In Kobe, McDonagh’s Irish roots and philanthropic leanings came into
play. He helped set up the Irish Network of Japan which was an
organization of younger Irish who were living in Japan.
“Actually, three of us set up a St. Patrick’s Night function in Kobe,”
he recalls. “We got various people to sponsor – to buy the Guinness and
whatever. We were planning to run it on the fly, but people came from
all over – we were surprised by the numbers. We made a handsome profit
and found, through a local priest, a Korean orphanage that needed
support. There’s a large Korean population in Japan and they, largely,
are less well-off. The event became so successful that it became an
annual affair. I think the orphanage is still wondering who these crazy
Irish people were who were dropping money off with them once a year.”
In 1993, McDonagh, on an upward trajectory, was transferred to London,
thus ending his Asia sojourn. He says that he learned “cultural
sensitivity” during his time overseas. “You value diversity, you value,
and you recognize, the richness that each people can bring.”
Back in London, he was soon on the move again, taking over the company’s
offshore operations in the Channel Islands before going back to London
and joining the global headquarters staff.
He made it to head of strategy there before the call to come to the U.S.
came. He was sent over to run the retail and commercial banking side of
the U.S. business, which was based in Buffalo, New York. Soon he was
made COO of the banking operation.
Then HSBC acquired Household Finance, one of the largest subprime
mortgage lenders, but also one of America’s largest credit card
companies. When the company began suffering under the subprime mortgage
deluge, the search for a topnotch executive ended at McDonagh’s desk.
McDonagh moved to Chicago to become CEO of HSBC Finance and to deal with
the subprime crisis, which he has done successfully.
 In
February this year, he was promoted to CEO of HSBC North America
Holdings Inc., which oversees both HSBC Finance and HSBC Bank.
By now the McDonagh management approach was tried and tested. He
expresses it this way:
“If you’ve got good ideas coming from your team, try not to stop them.
Your job is to manage the bright people around you and to be comfortable
and not be threatened by them. And if you can trust them, and you think
they have a good idea, let them go for it.”
He is an innovator too. He and the bank leadership have focused on green
technology and making the bank a carbon neutral one globally. He speaks
with pride of how all the office buildings in HSBC will eventually
conform to the highest green standards. Their new headquarters outside
Chicago was recently featured in the New York Times because of its green
focus.
It would seem counterintuitive for a bank chief executive to focus so
intently on this issue, but McDonagh is a new breed of manager who
realizes that green technology benefits everyone, as does good employee
relations, another area he spends considerable time on.
When the subprime mortgage crisis hit, McDonagh worked hard to reassure
his work force and deal with the problem head on.
“One of the first things I did was to go on the road. There are close to
3000 managers around the country, and I spent six weeks just talking to
them. Explaining, ‘This is the problem, this is the size of it, this is
what we’re going to do. You’re over here, look after our customers and
meet our plan.’”
Many observers are predicting hard economic times ahead, and McDonagh
himself sees the U.S. economy as being at a critical crossroads.
“I believe that parts of America are already in recession, but it won’t
be that deep and it won’t be that long,” he says, adding reassuringly,
“The American economy is very resilient.”
Ireland, always close to McDonagh’s heart, has changed enormously since
he left, and he is glad for that. “It has become far more multicultural,
which is a good thing. For decades, the world took the Irish in, and
perhaps it’s our turn to take other people in. We owe them that. We are
a very wealthy nation now, and we have to start to help others,” he
says.
McDonagh does his part. He is involved with The American Ireland Fund, a
philanthropic organization which supports cultural and educational
groups in Ireland, and also, through Enterprise Ireland, he serves as an
advisor for new Irish companies seeking to enter the U.S. market. His
wife, Kenane, meantime, is involved in charitable organizations in the
Chicago area, where their daughter Alison is in school. The couple’s
son, Rory, following in his father’s footsteps, is studying economics at
Trinity College, Dublin.
McDonagh, who sees the Irish economy as now going through a difficult
phase after the heady days of the Celtic Tiger, believes a highly
educated work force, preferably one that is flexible and multilingual,
can help Ireland find that “sweet spot” in areas such as financial
services, and keep the economy turning over.
His own accomplishment embodies that very successful aspect of the new
Ireland – its ability to compete globally. As one of the first
generation of the new “Global Irishmen,” Brendan McDonagh is an example
of how much has changed since the days when the Irish left on Famine
ships and were rarely heard from again.
He is living the dream of generations of Irish to better themselves
abroad. Except in his case, he is proving it with one of the world’s
truly global companies. With their combined global visions HSBC and
McDonagh seem right for each other.
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