Twenty-five years ago this week, I became managing director of BZW (predecessor of Barclays Capital) in Hong Kong. The office was unstable after a summer of firings, and I had been dispatched from Tokyo to steady the ship. On Friday afternoon, a man called Reggie from Warburgs shouted ‘Heard the news from home?’ across the lobby: the ‘great hurricane’ was battering BZW’s Thames-side headquarters and reducing its trading desks to a chaos of sodden paper and broken glass. On Monday markets crashed everywhere and I flew overnight to London to find panic turning to stoic resignation as our firm, barely a year old, sustained losses of £70 million. The bonus-fuelled post-Big Bang paraphernalia of investment banking had proved utterly feeble against the forces of nature.
Told to report to the gum-chewing chief executive, Lord Camoys, I ventured a remark about ‘the next support level’ at which Hong Kong might rally. ‘In these conditions,’ he growled, ‘there are no support levels.’ But neither of us really knew anything about extremes of market behaviour — and what we learned that week was never passed to our successors who would be there for the dotcom bust and the crisis of 2008. Perhaps that’s because the unlearning process was so rapid: as soon as markets began to recover the following year, I wrote in Falling Eagle (2000), ‘we had almost forgotten the crash had ever happened’. At this distance I remember it vividly, however: it left me a cynic of market prediction, but an optimist for the resilience of human nature.
No setback
The collapse of the sale of 316 Royal Bank of Scotland branches to Santander of Spain is, on balance, a good thing. They have to be sold to someone by 2013, because that’s what Brussels decreed, but it will be better for the health of retail banking if they are sold to one of the newer competitors who promise to bring high-street diversity — Virgin Money and JC Flowers were first to declare an interest — rather than the Spanish giant that has already swallowed Abbey, Alliance & Leicester and Bradford & Bingley. Better still if they are rebadged as Williams & Glyn’s, a forgotten RBS brand, and floated independently, with 1.8 million retail and 250,000 smaller business customers. The success of the flotation of the Direct Line insurance subsidiary (also mandated by Brussels) might prod RBS in that direction.
As for Santander, it evidently foresaw systems problems integrating the branches into its existing network, and realised it was not equipped to handle all those business customers. Its UK boss Ana Patricia Botín says she will now pursue slower-paced organic growth rather than acquisitions. That’s a good thing too, because although Santander is adamant its capital is not overstretched, it will surely one day soon need to deploy more of it in its traumatised Spanish home market. So what was described as a ‘setback’ at the weekend could be a win-win all round.
Hot competitors
My description of Chinese companies such as the mysterious Huawei as ‘ruthlessly efficient global competitors’ prompted an anecdote from Cyprus. Clive Turner has been lobbying for some years for the establishment of the island’s first crematorium, to serve a large expat population plus Cypriots who are not deterred by Greek Orthodox disapproval of cremation. Local bureaucracy has not been helpful, and attempts to interest European suppliers elicited little response. Then he contacted the website of what turned out to be the largest Chinese player in this niche sector. ‘The same day I had a phone call from someone speaking perfect English, who wanted to double-check my email address. It was midnight in China at the time. Within three minutes of the call I received an email setting out all the costs, together with diagrams and an offer to deliver the units, train the operatives and make twice-yearly maintenance visits.’ Local delays continue, but the Chinese have kept in touch. ‘When the time comes, to whom do you think we shall turn?’
To the lassies
A salute to two top businesswomen who are stepping down. Dame Marjorie Scardino was the first female chief of a FTSE100 company when she was appointed at Pearson, owner of Penguin and the FT, in 1997; despite occasional bursts of media flak, she will leave the publishing group considerably more focused and profitable than she found it. Likewise Kate Swann is credited with rescuing the sinking WHSmith, where she took the helm in 2003. Both have commanded respect without drawing attention to gender. Scardino in particular resisted any attempt to glamorise her: one (female) profile writer found the Texan-born mother of three ‘as uncomfortable as a snail without its shell in the glare of publicity’.
But both also remind us of the differences between the male and female psyche in business decision-making. The psychologist Stephen Carter, with whom I shared a debate platform at the delightful Wigtown book festival, raised audience eyebrows by referring to ‘the urge for arousal’ in male risk behaviour; women untortured by trouser-demons often make better professional investors than men, because they resist the temptation to churn portfolios and chase market peaks. Michael Lewis’s Boomerang gives a hilarious account of how Iceland’s macho fishermen, having rebranded themselves as financiers and bankrupted their nation, have subsequently had their keys taken away by their sensible womenfolk.
Scardino’s retirement leaves only three women running FTSE100 companies — at Burberry, Anglo American and Imperial Tobacco. We need more, and most particularly it would be a change for the better to have a cohort of no-nonsense mothers-of-three running our retail banks. Ana Patricia Botín, as it happens, fits that description: with her newly cautious UK growth strategy, she can show her sisters the way.
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