Morning:
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Sir Fred Goodwin at Royal Bank of Scotland is probably quite pleased to see the growing number of calls for the chief executive of HBOS, Andy Hornby, to be fired following the problems with the group's rights issue. This not because he bears Hornby any ill will, but because it has deflected the attention from him. If shareholders are gunning for Hornby, it means they are unlikely also to have Goodwin in their sights.
But it really is time shareholders grew up. Yesterday saw the departure from Citigroup after 23 years of deputy chairman Michael Klein and, though it did not say so in the bank's press release, he is leaving quite obviously because of a falling-out with Vikram Pandit, the guy who has been trying to hold Citigroup together since the ousting a few months ago of chief executive Chuck Prince. It is a sign of the continuing turmoil within the organisation. The message one should take from this, however, is that satisfying though it may be to shareholders to exact the ultimate revenge on a chief executive who has made a mess of things, firing him may make things worse.
No one should think sacking the boss provides an easy answer. Running a big bank is a hugely complex job, and not just something that a new man can pick up after a few days behind the desk.
Thus the coded message from the United States, where the oustings have been more widespread than here, is that many of the new men are floundering - understandably - as they struggle to come to terms with the magnitude of the challenges they face and the complexity of the organisation they are supposed to run.
The moral is that you should not get rid of the top man or woman unless you are certain that the replacement will not only be different, but will also be better. That is a tall order. It makes far more sense to leave Goodwin and Hornby in their jobs. They understand the businesses, and know where the quicksands are. More to the point, being men not entirely without ego, they no doubt both have an insatiable desire to prove their doubters wrong, to sort out the mess and to put their banks back on the front foot.
You simply can't buy motivation like that. Besides, it is a great deal more punishing for them than giving them a shedload of money to head for the golf course.
Brassed off at Merrill Lynch
Americans don't do irony - they take themselves far too seriously - so one has to assume the following is true. It is reported from New York that the top brass at Merrill Lynch are keen to demonstrate to lesser troops that they are "sharing the pain" that is the inevitable result of the cost-cutting drive.
Accordingly, senior managing directors have been told they may no longer use private jets without first getting permission from the global head of investment banking. And in another devastating attack on their lifestyles they have been told they may have to travel by taxi between appointments rather than chauffeured limousine.
Shareholders who have had to bear the brunt of the $40 billion of subprime writedowns which these executives have visited on the group in recent months might have thought more stringent cuts would be in order, and that the use of jets and limos would appear to have continued long after the credit crunch started. They might feel the pain was still not really being shared quite equally.
They should know better. If investment bankers don't do irony, how much less likely is it they'll do contrition?
F&C seizes the Reit time
Alain Grisay, the head of Foreign & Colonial, has more reason than most to sit on his hands, given that Friends Provident is trying to sell a controlling interest in the business. All credit to him, therefore for seizing the moment yesterday to snap up reit, one of the sharpest property investment teams around. When the going gets tough...
