CITY AND SUBURBAN
Headhunters spot a sit. vac. coming up it's a job for a bruiser
CHRISTOPHER FILDES
Now thrive the headhunters. They are after chief executives for Barclays, for the Stock Exchange, for City regulators — and soon, they must think, for the plummiest post of them all. Time to draft the job spec- ification. The vacancy, which may occur in July, is for a financial director to take responsibility for a budget of £290 billion. The salary is modest by today's boardroom standards, but exceptional benefits include tied houses in London SW1, Bucking- hamshire, and (once a year) Kent. Presen- tational skills would be desirable, but accu- rate forecasting and tight control of cash will be essential. Weaknesses in these areas have compounded the problems experi- enced in difficult economic conditions, though some recovery is now reported. International competitiveness is a matter of concern. A policy of overpricing (described as stable pricing) had to be reversed in humiliating circumstances under extreme pressure from the market, and further cuts may still be needed. More generally, the financial strain is increasing. Revenue cov- ers only £5 for every £6 of expenditure. A borrowing programme is in place but clear- ly cannot be sustained at these levels. There is some scope for enhancing rev- enues, but the absolute requirement is to curb expenditure, which has continued to rise for some years at a speed based on false assumptions. Cuts in spending plans will need to be carried against departmen- tal heads who will fight their corners fierce- ly. The last two appointments to this key Position have been internal promotions, but the need now is for a strong external candidate, who will not be the captive of his staff and will make changes of his own. Nor will an inoffensively safe pair of bands suf- fice for the hard and unpopular choices that will have to be enforced. This is a job for a bruiser.
Win for Barclays?
NOW what about Barclays? The head- hunters have been trying to round up the usual suspects in other High Street banks, but I am not convinced that the search will end there. It may turn to a City banking group which (notably unlike Barclays) has never tapped its shareholders for new money. Instead, it has grown its own capital and earned good enough returns on it to multiply its share price, in the last dozen years, by a factor of 25. (Barclays is not like that, either.) This is no ephemeral wonder- stock but a blue-chip City name, estab- lished here since 1800. The group chief executive was invited, at last year's Interna- tional Monetary Conference, to tell the heads of the world's largest commercial banks about their future. Many large banks, he told them, had been shown up as believ- ing that size was the proof of success, eager to take on risk but unable to assess it, and, some of them, poorly managed. (Who can he have meant?) He recommended them to forget about size and think about returns to shareholders and customers, to focus on what they are good at, and to realise that a reputation for conservatism and prudence is essential in everything they do. This was Win Bischoff of Schroders, as much respected as any banker in the City, and a gleam, so I am told, in Barclays' eye. Schroders, like Barclays, is a family bank, but the family has kept its shares.
Fire and courage
MY LAST sight of Philip Chappell is etched on my memory. At his farewell din- ner, six months ago, he spoke with fire and courage, in words hampered by the worsen- ing disease that has now killed him. The City has lost a reformer, a libertarian, and a friend of the individual against the institu- tion, whether public or private. Personal equity plans and personal portable pen- sions were his ideas — the operative word, for him, was 'personal'. He had been recruited into Morgan Grenfell as its youngest director. As its vice-chairman, he was urged to stop teasing the pension funds with his reformist arguments, for Morgan managed billions of their money and his colleagues did not want them upset. He refused and resigned. To Jack Morgan's maxim — 'only first-class business and that in a first-class way' — he had always added `first-class people'. He was one.
Ronson and company
GERALD RONSON always had the sense not to let shareholders in. Let other tycoons, seduced by the charms of the stock market, take their shares public — he would be content to buy and sell them. Now that he needs to cover certain excep- tional expenses (like £5 million for Guin- ness) these are matters to be arranged between himself, his company and its bankers. I have consistently argued that boardroom pay is the responsibility of the company's owners. This is a case in point. A pity that the deal with his bankers will leave them as shareholders. Mr Ronson has one distinction which has become unusual not shared, for example, by the fly-by-day Asil Nadir: he has paid for his round.
Hero from zero
I AM GLAD to concur with our esteemed contemporary, Tribune. In its columns, Lord Desai has called for Value Added Tax to be reformed by abolishing the zero rate. I suggested this at Budget-time, saying that it would give us two VAT regimes (exempt or taxed) instead of three, cut out a vast pile of circular paperwork and enable the standard rate to be brought down. So it would, for Lord Desai reckons that it would be worth £20 billion in revenue. He is a professor at the London School of Eco- nomics and was until last week a Labour spokesman in the House of Lords. For sug- gesting an economic policy that differs from the Government's, he has been fired by the Opposition, so I am sure he is right.
Don't wake Drake
A BUNCH of misguided mudrakers — the types who cannot leave the Titanic or Bis- marck alone — are planning to fish up the Elizabethan entrepreneur, Sir Francis Drake. He was buried at sea, 'slung atween the roundshot in Nombre Dios Bay', as Newbolt tells us. The mudrakers want to bring him back. Newbolt points out that the right way to do this is to beat his drum when the Dons sight Devon. Now Drake's Drum will have to be rewritten:
'Drake, he's in his hammock and a thousand miles away.
(Capten, art tha sleepin' there below?)' `Trying to, damn you; BUZZ OFF.'
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