If we are happy to venerate a Palestinian patron saint — it occurred to me, as I composed these thoughts on St George’s Day — then we can’t really object to a foreign governor of the Bank of England. The idea may offend the self-esteem of indigenous bankers, but that’s the way the betting has moved since last week’s revelation in the Financial Times that ‘an informal approach by a member of the Bank of England’s Court’ had been made to Bank of Canada governor and former Goldman Sachs executive Mark Carney as a potential candidate to succeed Sir Mervyn King next June.
Carney, whose name was also in the frame to run the IMF after the fall of Dominique Strauss-Kahn, has denied receiving any signals from Threadneedle Street and pointed out that his tenure in Ottowa, where he doubles as chairman of Canada’s Financial Stability Board, has three years to run. The story was also slapped down by Court chairman Sir David Lees, and seems to bear the fingerprints of Treasury insiders — who, again according to the FT, believe the Bank needs shaking up by a new-broom outsider ‘following its ponderous response to the financial crisis’.
Not only that, but my man in the Downing Street meditation room whispers that the idea of offering the governorship abroad for the first time in the Bank’s 318-year history appeals to David Cameron himself as a sort of homage to the blue-sky boldness of his departed strategist Steve Hilton, who urged him to appoint former Los Angeles police chief Bill Bratton as Commissioner of the Met — which the PM now regrets not doing. That all sounds a bit weird to me, and will come as depressing news both to deputy governor Paul Tucker, the well fancied internal candidate, and to Lord O’Donnell, the former cabinet secretary whose hat, we gather, provoked no cheers from No. 10 when it was tentatively thrown into the ring. So we’d better line up a few more exotic names. Jean-Claude Trichet, recently retired from the European Central Bank? Hardly. Ngozi Okonjo-Iweala, Nigeria’s first female finance minister, runner-up for the World Bank presidency and this column’s favourite candidate for every international job? Perhaps not in this case.
No, here’s my hot tip: step forward Dr Alan Bollard, a man whose very name suggests the stability we yearn for in monetary matters. He will retire in September, aged 61, after ten years as governor of the Reserve Bank of New Zealand — and he’s ‘a subject of the Queen’, a status which the FT thinks might ease Mark Carney’s appointment.
More to the point, Bollard is an inflation-fighting economic pragmatist who has also served as his nation’s Treasury secretary, spent his early career in London, and knows how to deal with the unexpected, including last year’s devastating Christchurch earthquake as well as the impact of market meltdowns. He’s a modest chap and you may not have heard of him before, but he’s as well qualified to follow Sir Mervyn as anyone on the planet, and the bonus is that the Reserve Bank has already said it will search overseas as well as at home for his successor. So we could elegantly offer one of our own in exchange: at last, a suitable job for Lord Turner. The rumour starts here.
Growing and not dying
So farewell Cable & Wireless Worldwide, which is about to be swallowed by Vodafone for a fraction over a billion pounds. In the absence of a late counterbid, the deal looks all but done and represents a sad finale for a historic telecoms business, even though its name will not entirely disappear.
Descended from a group of telegraph companies founded in the 1860s, the original Cable & Wireless provided the networks that linked much of the British Empire. It was nationalised in 1947 but returned to the private sector in the early 1980s and went on to launch Mercury Communications, a high-tech competitor to British Telecom — at about the same time that Ernie Harrison of Racal, the military radio maker, acquired one of the first mobile phone network licences and took a very high-risk punt on building Racal Telecom, which evolved into Vodafone.
If I had been asked in 1985 to predict which of those three — BT, C&W or the new Racal venture — would become a global giant in the next generation, I might well have bet on the privatised C&W under the forceful Sir Eric (later Lord) Sharp, who shaped up to bid for Racal — which outwitted him by demerging its mobile phone business. Renamed Vodafone, that venture went from strength to strength, apart from a big blip in the aftermath of its overpriced acquisition of the German group Mannesmann in 2000. Meanwhile BT ploughed its furrow and C&W, weakened by disposals and burdened by disappointing acquisitions, was eventually described by its own chief executive John Pluthero as ‘an underperforming business in a crappy industry’.
Pluthero’s strategy for maximising shareholder returns was to cleave the group in two: C&W Worldwide providing services to governments, large companies and other telecoms carriers, and C&W Communications running consumer operations in Monaco, Macau, Panama and the Caribbean. But Worldwide fell into losses, Pluthero departed and Vodafone — whose revenues are ten times those of both C&W arms combined, and whose market capitalisation outstrips theirs 50 times over — moved in with an offer well below half of Worldwide’s value at the time of the 2010 demerger.
Technological edge, management skill and the whims of the stockmarket all played a part in this outcome, but there’s little point lamenting companies that fade: this is really about the flourishing of Vodafone. I can do no better than to quote my wise banker father, a friend and admirer of Ernie Harrison and a long-time lender to Racal, in the only recording that survives of his voice: ‘I believe that businesses continually die and are revived and are born and grow, and where you want to be is in the sector that is growing and not dying, even though the risks can be extremely high.’
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