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Terry’s got it right as Lloyds sale branches into fiction
01 May 2012
To those in the City who are of literary bent, the best book on the financial crisis is Terry Pratchett’s Making Money (he wrote it before the banking system collapsed, but then, he’s a clever fellow).
Pratchett, a comic fantasist who still couldn’t really have come up with a character so vaingloriously absurd as Sir Fred Goodwin, imagines a bank takeover that involves vampires and characters with names such as Moist von Lipwig. (There are hardly any vampires in real-life banking.)
If Making Money were required reading at the Financial Services Authority, perhaps we would all be in much better shape.
When the tyrant Lord Vetinari appoints the head of the post office to run the Royal Bank of Ankh Morpork, objections fly.
Doesn’t he realise that banks should be run by people who understand banks? Vetinari responds: “People who understand banks got it into the position it is in now. And I did not become ruler of Ankh-Morpork by understanding the city. Like banking, the city is depressingly easy to understand. I have remained ruler by getting the city to understand me.”
This storyline finds a parallel in the FSA’s handling of the sale of 632 branches of Lloyds to the Co-op, a deal that now seems unlikely to happen. The difference being that unlike Vetinari, the FSA insists that only people who have previously mucked up banks can run them in future (I exaggerate, a little).
Last week, Lloyds said exclusive talks with the Co-op had ended, and others are now invited to join the fray.
This followed weeks of suggestions from the regulator that the Co-op would not be a proper owner of the business.
It has a financial services arm with revenues of £2 billion, has never gone bust or needed a public bailout, and worst of all it doesn’t have a chief risk officer! Unlike, say, Royal Bank of Scotland, Bradford & Bingley, the Halifax and Lloyds. Which all just sailed through the financial crisis.
The Co-op board, sniffy-sounding leaks noted, included a Methodist minister, a plasterer and a nurse.
Such folk cannot be relied upon to pay themselves £2 million and blame other people when things go wrong. It would be banking anarchy.
So now Lloyds is reportedly in talks with an organisation called NBNK, a bank that doesn’t really exist yet, beyond having a board stuffed with the great and the good of the banking industry (Lord Levene, Sir David Walker, definitely no plasterers).
NBNK will need capital from Middle Eastern investors to proceed, it seems, but maybe it would do a decent job of improving competition for borrowers and savers.
Still, it is rather a pity that competition couldn’t come from a larger mutual, such as the blameless, rather likeable Co-op.
Unlike the FSA, Vetinari would have had no problem with this.
Perhaps Pratchett can persuade Vetinari to become the next Governor of the Bank of England, if only in fantasy land, so we can see what a happy ending looks like.
Just where did L&G’s able Mary go?
Mary McCave was the most powerful woman in the City of whom you have probably never heard. As head of equity trading at Legal & General, she ultimately decided the direction of something like £150 billion.
She wasn’t picking the stocks themselves — they have fund managers for that — but the timing of the deals, the execution, was down to her.
If you’re one of the at least seven million people with an L&G pension or savings scheme, McCave had a big hand in whether it did well or badly.
Despite such power, she was markedly low key. Google doesn’t throw up much about her — the odd speech to a conference here or there on matters of pointed dullness seems about it.
She could have used her position to do a Nicola Horlick and strike out on her own, to become a media presence. Instead, she just did her job. It seems reasonable to assume she was awfully good at it.
Trading floors are very male environments (this is changing, but slowly). And even those women that stick at it don’t often become the boss.
Asking around, there seem to be very few women that rise to be head of equities. Some do run individual trading desks. But not entire floors.
McCave, you may have guessed, is not doing this job any more. Was there a bust-up? A controversy? Was she paid off? How much?
L&G declines to discuss the issue, saying only that McCave “no longer works for the company”.
Something happened. What?
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