23 July 2015
Manners Maketh Man
by J R Thomas
It’s getting to be a very dangerous world, the modern financial industry (even if not like the appalling days of 1970’s Germany where several bankers were kidnapped and killed by the Baader-Meinhoff gang, the self-proclaimed Red Army Faction who terrorised the West German government and business; when City and investment bankers talk about the hatred felt by the world for them, they would do well to remember that there was real fear stalking the streets then). Now the fear at the top is of being sacked, and the sackings are getting public and brutal.
The revolving door at the Royal Bank of Scotland seems to have slowed down, having ejected Sir-no-longer Fred Goodwin and most of his crew, and then spun again to also evict Fred’s successor Steven Hester and some of his guys. But at Barclays the door is still working, with the recent brutal and unexpected firing of Antony Jenkins, its chief executive. Jenkins was himself promoted to the big leather chair to replace Bob Diamond, carried away on the tidal waves of the LIBOR scandal.
Even bigger fish are not immune from sudden career termination. Over the weekend out went Martin Wheatley, chief executive of the Financial Conduct Authority. In his case the smoking gun was spotted in the hand of the Chancellor of the Exchequer himself, Tory new star and possible (probable?) future leader, George Osborne. Mr Wheatley had led the FCA (which regulates the banking industry in the UK) since it was formed from the smoldering ruins of the Financial Services Authority (the “FSA”- following the fine detail is important in banking).
Mr Wheatley had been causing some concern in banking circles and in the Treasury for a lack of understanding of the private financial sector. (He was for many years an executive at the London Stock Exchange and then moved into regulation, starting in Hong Kong in 2004 and returning to London in 2010.) But of more immediate concern was his self-avowed policy of “shoot first, ask questions later”. This, of course, was a strategy which worked well in the Wild West, but in spite of many jokes, the City is not the Wild West and (though the popular press may disagree) even bankers are entitled to such well established concepts as justice and a fair hearing. Mr Osborne has become increasingly concerned that though being beastly to bankers may win a few votes, it may mean the bankers go off and ply their trade elsewhere. That would be very bad for the British economy. Noises coming from Standard Chartered bank and HSBC about going offshore are sounding increasingly genuine to the Treasury, so Osborne decided to act. Out went Mr W.
At the FCA he had had four years in the job and his contract was up for renewal in March next year anyway, but George was not going to wait until then. He wants a change at the top now, even to the extent that he has to pay Mr Wheatley’s contractual one year’s notice period, and has to step up Tracey McDermott (the FCA director of supervision) as interim chief executive until a new chief executive can be identified and recruited. That shows a startling desire to be “rid of this turbulent priest”, as Mr Osborne might have said if Henry II had not get there first.
But this review is not really about the turmoil in financial services and the dangers of getting too comfortable in the back of the CEO’s Jaguar. What is startling to the observer of corporate turmoil is the way these things are done now. Perhaps we had all got a bit too British about those “resigning to spend more time with their families” and those “who wished to pursue other business opportunities”. We mostly knew roughly what was going on when the board “with deep regret accepted the resignation…”, sometimes even thanking the departing head honcho for “his years of service which have made such an extraordinary contribution to the business”. But there was a certain dignity, a certain grace, about keeping up the proprieties, displaying dignity, saving some face. Senior executives have children, grandchildren, even mothers. They are entitled surely not to be tittered at in Waitrose or at the golf club. They need to elegantly phrase their updated CV to cover their change of career strategy, not have it sniggered at and dropped slowly in the bin or Deleted Items file.
No doubt the Chancellor has had a rush of very manly feelings, having brought his axe down vigorously on a man who was proving not to have the finesse to do a job which increasingly required walking a tightrope between bringing standards up to what the public might wish to see and not scaring away the source of so much of the UK’s wealth. But surely, after some banker’s dinner, over a glass of whisky and a fine cigar, the two powerful men could have come to some arrangement concerning the closing of a job well done, a desire to seek new challenges, grateful thanks all round, and exit at contractual end?
And in the Barclays tower in Canary Wharf, the entire senior staff have got a clear message that the new chairman is not to be trifled with. Some may up their game as a result, but others may become secretly resentful, and the best might be consulting the headhunters, those ever hovering vultures. (“How do you recognise your best people?” runs the old City joke, “Ah – they are the ones who have left” says the rueful Human Resources Director, gesturing over the empty desks). Barclays has been draining top staff for a while, and an incoming chairman might want his or her best people to know that life is going to get better. Getting rid of the CEO is one thing, but doing it with dignity and thoughtfulness sends a much better message.
This is not the Wild West, chaps. Gunning down in the street is what the baddies do. A private room of the St James club, with a bottle of whisky and a pistol, is much more the British way. If nothing else, you never know when the chap you sacked ten years ago is going to be appointed your new chairman – or leader of the opposition.
