29 JULY 1989, Page 25


National Westminster Bank is purged in a refiner's fire


Iknew it was a mistake for the National Westminster Bank to set its new television commercial to music from Messiah — the fierce aria which tells of purgation and Judgment: Who shall stand when he aPpeareth? For he is like a refiner's fire.' Who indeed? Never has a High Street bank undergone such a purification by fire, or ritual sacrifice. We all know of bankers, and bank chairmen, who have presided over disasters and moved safely away or into retirement before the damage came to light. At Natwest, the chairman, Lord Boardman, has brought his departure for- ward — he was going at the year-end, his successor is in waiting, the post is non- executive, and carrying the can is one thing a chairman is paid for. It is a different matter to pass cans to three executive directors. Two of them, Charles and Terry Green, were among the triumvirate who have, in effect, run Natwest. It is worth remembering, now, that they have helped to make and keep it among the largest, strongest and most profitable banks in the world, and that their own integrity has not been and could not be in question. The Charge against them is of failing to under- Stand what was going on underneath them in their securities business in County Nat- West. They were not the only ones. The Chief executive of that business reported to the Natwest's UK Business Committee, Presided over by a deputy chairman of the bank, that the disastrous Blue Arrow rights issue had been a success. The committee appears to have swallowed this without Criticism, either of its own, or now from the mspectors of the Department of Trade and Industry. As for County's chief executive, he is exonerated; the inspectors say that he Should have been able to rely on his subordinates. I cannot help thinking that he must have had nerves of iron — when his outfit was handling its biggest deal, with many millions riding on success or failure ----. to leave the chaps to carry on and keep him posted. Still, the significance of the affair is not that it could happen in the stock market, but that it could happen in a division of a High Street bank. It impinges on the bank's credit, for that concerns us ,11, and is indivisible. If Natwest is to stay In the securities business — as its chief executive, Tom Frost, says that it needs to —

it must change its own style of top management. The path to head office begins, as it always has, at the branches, the bank is run by British commercial bankers who have been there all their working lives. It needs a wider range of experience and judgment — and now it has situations vacant. Lord Boardman says he is glad to record that the Bank of England had not required these resignations, and I say: ho, hum. The Bank, with its new powers in reserve, has seen a mighty baronny brought to heel and the City is a different place.