. . . ALL THE WAY TO THE BANK
Lord Alexander has the experience to do his new job
THE chairman-designate of our biggest and most embarrassed bank has been paraded in its hour of need, and stepped off briskly on the wrong foot.
For his first message from the National Westminster, Lord Alexander chose to attack the Department of Trade and Indus- try's inspectors, who, he said, attacked people without giving them the right to reply. In making the point he attacked a former officer of the bank, who promptly complained that he had not been given the right of reply.
Arguing with the inspectors was not what was needed. Any novice could have written the great counsel a better brief: signal honour, demanding appointment, highest standards, painful decisions, les- sons to learn, put the past behind us . . . . His false start suggests that, in his new job, Lord Alexander does indeed have lessons to learn, as well he might. He must be a quick learner.
Two years ago the City knew him as Robert Alexander QC, the leader of the commercial Bar — as, indeed, of the Bar as a whole. He was the man you would want on your firm's side or your side when the stakes were high. He acted for Ian `Goldfinger' Posgate, controversial Lloyd's underwriter. He acted for Geoffrey Col- lier, the head of share trading at Morgan Grenfell, who was caught red-handed help- ing himself to inside information and pas- sing it on to a private company in the Cayman Islands. He persuaded the judge to let his unpleasant client stay out of prison — and that did stir the City, because by that time he had agreed to preside over the City's own tribunal, the Panel on Takeovers and Mergers. It was a coup for Robin Leigh-Pemberton, Governor of the Bank of England.
The Panel is the Bank's creation, and its greatest success is in getting the City to accept rules without the force of law. That success owed much to the Panel's first chairman, Lord Shawcross, that formid- able lawyer whose cold eye could petrify a witness at 60 paces. His successor was not in the same class, the Panel's authority dwindled, it muffed the Guinness affair. Bankers and brokers, writing the Panel off, said there would never be another Shaw- cross. The Governor knew better — and the bankers and brokers fell to asking how he had induced the Bar's biggest earner to spend two days a week for modest reward in the City?
Peerages are inducements not strictly in a Governor's gift, but the Panel's new chairman swiftly became Lord Alexander of Weedon. By then he was putting his stamp on his work. Corporate financiers had taken to challenging the Panel in the courts; the Panel's rulings, under his gui- dance, stood the test. On the Takeover Code's first principle that all shareholders should be treated alike, the Panel made Guinness compensate, with £85 million, those who were not offered its special price for Distillers shares. The Panel's stock and its chairman's stock rose. He slotted smoothly into the City establishment.
It was at this time that the board of the National Westminster Bank ineptly cont- rived first to select a new chairman and then to frighten him off. It was and is a board of the old great-and-good school, getting on for three dozen strong, mostly non-executive and non-bankers — includ- ing the chairman, Lord Boardman, who was approaching his 70th birthday. Their choice fell on Sir Peter Walters, chairman of British Petroleum, who had just had his official portrait commissioned — a sure sign at BP that the chairman is preparing to move out.
Sir Peter accepted, but then let it be known that he would begin by reforming the board. At BP he was used to a more streamlined version, with half the number of directors, and half of those executives. With their monthly lunches under threat, NatWest's great and good revolted, telling Sir Peter to think again. He thought again and decided not to come. While the board was trying to think of someone more amenable, and Lord Boardman was telling everybody how fit he still was, the inspec- tors called at County NatWest. For the first time, a high street bank found itself the subject of a DTI inquiry — and under the provisions which suggest malpractice or the misleading of shareholders. The crisis came on NatWest with the succession unresolved, and with no obvious candidate in all that vast boardroom.
Names of every sort were bandied about — even Nigel Lawson was (wrongly) said to have been threatened with the job but behind the scenes, the Governor was going into action. He is himself a former chairman of NatWest. He could sense the damage which the DTI report might cause. The new chairman, evidently, must not be associated with the damage, must come from outside, should stand for law and order and judgment. NatWest's new chair- man was very much the Governor's choice. Robin Leigh-Pemberton likes a lawyer he was one — and a grandee — he is one.
This choice represents a bet on class rather than on form. In the sense it is an old-fashioned appointment. Sir Peter Wal- ters, though no more a banker than Lord Alexander, knew what it was like to chair a large (and financially minded) company. Lord Alexander has never chaired any- thing much bigger than the Panel or more coherent than the Bar Council. He comes in as a non-executive chairman. He inherits the big board with its abundance of com- mittees, and the executive structure which until the other day was a phalanx of commercial bankers, all of whom had come up the hard way from the branches and spent their working lives with the one bank.
He cannot go on like that. Some changes have been forced on him, with the depar- ture of the three executive directors who were blamed for not understanding what was going on at County. They leave a great hole in NatWest's top management, and there is not much point in filling it with juniors from the same background but with less experience. (Contrast the Midland, with scarcely a Midlander.) Lord Alexan- der has already accepted that he must go outside and recruit.
The board itself, that great aviary of supposedly wise owls, has had its tail- feathers pulled out by County. Its judg- ment of men and policies failed. Its key committee under a deputy chairman allowed itself to be duped. Another deputy chairman solemnly told the inspectors that in rigging the market, the question was whether the Bank of England approved. Sir Peter Walters must be laughing all over his serious face.
County made NatWest look amateurish. The task for its new chairman is to remedy that, with a less cumbrous and more practical board, and a more broadly based senior management. That is asking a lot of a chairman who is neither a banker nor a corporate man nor an executive. The City believes he can do it, and wishes him well, but one way or the other he is likely to be the last of his kind.
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