Source: Sharecast
Nelson, 76, has served as interim chair since 1 October. He first joined the board in September 2023.
HSBC said the accountant had been appointed following a "robust" process, with both internal and external candidates considered.
However, some City watchers had expected a more-high profile figure to replace former incumbent Mark Tucker, who first announced plans to retire in May.
Chief executive Georges Elhedery also said a day earlier, when speaking at the Financial Times Global Banking Summit, that Nelson did not want to serve a full term of between six and nine years, "given the stage of his career".
Former chancellor George Osborne had been seen a potential candidate, as had Goldman Sachs executive Kevin Sneader.
HSBC is Europe’s biggest bank but also has similarly extensive operations in Asia.
Elhedery took over as chief executive just over a year ago, and in that time, has undertaken a major overhaul of the business, including slashing its presence in Western countries in favour of Asia.
Tucker, who left in September, was chair for eight years.