CITY AND SUBURBAN
Lloyd's man gets instant beatification it's a game of two halves
CHRISTOPHER FILDES
It is nice to know that someone made £170 million out of Lloyd's of London, if that is what the late Matthew Harding did. He has gone on to instant beatification for investing some of it in Chelsea Football Club. Mr Harding was a Lloyd's broker who specialised in reinsurance, the device by which insurers pass on to other insurers the risks they do not want to run them- selves. Brokers live by the commission they can earn, and there was certainly commis- sion to be had when the same risks were going round and round in Lloyd's like dirty socks in a washing-machine. This process was described by Carlos Miro, giving evi- dence in Washington to a Congressional committee while on leave from the jail where he was doing time for fraud. He had found Lloyd's an eye-opening experience, he said: 'How expert the Lloyd's brokers were at raking off a commission as the retail or direct broker, then again by rein- suring the policy-issuing insurance compa- ny, and then again by arranging the reinsur- er's own reinsurance, and so on — pyra- miding these layers of commission to as much as 25 per cent of the gross premiums, if not more.' Mr Miro thought this a neat trick and started to do it himself. It worked well with underwriters — golden geese, he called them — who thought that insuring excesses of loss would be profitable and with members of Lloyd's who hurried to join in. So the business spiralled up, and then down. This was one way in which Lloyd's members came to lose £11 billion. The newspapers which (as Stephen Glover writes this week) gave Mr Harding such a rousing send-off took their figure for his wealth on trust, or from one another, and all I would add is that the big money nowadays is being made in football clubs. If a successful investor in a football club were looking for people who needed his money, Lloyd's could point him in the right direction.
Health farm hazards . . .
I HAVE rather given up on health farms it takes too long to recover from the injuries inflicted on me — but Helmut Kohl believes in them. Once a year he has that mighty form planed down, and you can see how long it lasts. Now he is trying the effect on his country's budget. More belt- tightening is needed if the Germans are to qualify for Europe's single currency on time. It will be nip and tuck. These crash budgetary diets are being prescribed all over Europe, and cheating is rife. The French have worked out how to rig the scales. (Hard luck, the nurses have noticed.) Others will just breathe in, or plead that they have heavy bones. It is already obvious, not least to the staff, that as soon as they weigh out they will have a binge, to celebrate. Health farms do that to you, too.
and Freudian slips
NO wonder that in his Wincott lecture, Professor Pedro Schwartz maintains that the motives for ever closer union are not economic but Freudian. He has it all worked out: 'The Spaniards' — he is one 'want to bury Franco. The Portuguese want to be French. The Greeks don't want to be Turks.' The Germans, as he does not quite say, want to be respectable, and the French want to tell them how to do it. The Bel- gians, though? Their motive must be of another order. They have the most over- weight national debt in Europe — amount- ing, as it does, to 131 per cent of the total national output of frites, chocolates and other goods and services — and with any luck ever closer union will allow them to unload it on their neighbours. They show signs, though, of developing a Plan B, which would depend not on union but on dissolu- tion. Belgium would disappear into a haze of feuding, Flemings and Walloons, and the debt would be left to look after itself, as in what used to be Yugoslavia. This could work for Italy's overweight debt, too.
Lenders rush in
PUBS used to proclaim that they had an arrangement with their bankers: 'They will not sell beer and we will not cash cheques.' Now the demarcation lines are down, and Sainsbury's have added banking to their range, somewhere between the fabric con- ditioners and the detergents. Bankers are resisting the temptation to reply in kind, beyond claiming that their queues are shorter. They are now, so they say, at the point in the cycle when their business looks so easy that everybody wants to join in. (This year's profits from our big four bank- ing groups are set to run into eleven fig- ures.) The next six months will be euphoric, if Kenneth Clarke has anything to do with it. These are the times when bankers expect to make their worst mistakes, though they naturally hope that the novice lenders will make more of them. Ten years ago the TSB and the building societies were preparing to rush in. At Barclays, Sir John Quinton regarded them benignly: 'I've got lots of custtmers they can have.'
Gold label
I DO hope to be invited when the man with the penknife and the sticky label descends into the vaults of the Bank of England. Behind him will troop the Albanian delega- tion (got up, so I imagine, like the disguised lovers in Cosi fan tutte) and the Tripartite Commission, rather doddery now, having been on duty since the war ended. The Commission's peeling label will be scratched off a pile of gold ingots and Alba- nia's label stuck on. Then all will adjourn to the Court Room for a drink. This settle- ment clears the way for the monetary gold reclaimed from Germany to be shared out, or relabelled, and its trustees on the Com- mission can at last go home. A blow to the US senators who (as I reported from New York) might have promised the gold to good vote-winning causes, but by then the elections will be over.
In hoc logo vinces
JUST what the Church of England needs: a logo. It is made of a C and an E and a cross, all in purple, and at £13,000 is jolly cheap. Companies can spend fortunes on such vanities as relaunching BP as BP. Chairmen are touchingly proud of these non-solutions to non-problems, which enable them to push their real worries fur- ther down the list. I dare say the Arch- bishop knows the feeling.
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