What spoilsports they are at Royal Bank of Scotland. We’ve waited years to hear again from Fred Goodwin and Sir Tom McKillop, chief executive and chairman of the bank when it sank in 2008. Now the board wants to kill the legal case that could see the duo, plus two other former directors, cross-examined in court.
RBS’s attempt to settle with the 9,000 shareholders who claim they were misled into backing the £12bn rights issue in 2008 is not a great surprise. Chief executive Ross McEwan seems sick of a case that reminds the outside world of the state-backed bailout that happened six months after the rights issue was launched in April 2008.
One can also sympathise with McEwan’s sense of priorities. Four other shareholders groups settled before they got close to the courtroom. From where McEwan sits, the argument with the hold-outs can indeed be seen as a time-consuming distraction. The sums at stake are significant but they are a trifle compared to the multibillion-dollar territory that RBS will enter when it starts negotiations with the US Department of Justice over mortgage-backed securities that were allegedly mis-sold before the crisis.
Yet, for all that, one hopes the 9,000 shareholders refuse RBS’s improved offer and take their case to court. That is not, actually, because Goodwin and co might provide lively entertainment. In all likelihood, the case would be dominated by dense technical points related directly to the content of the rights issue document.
But the exercise might still provide valuable insight into the biggest failure in British banking history. The period in question includes the critical months between the failure of Bear Stearns in March 2008 and the full disaster that arrived with the collapse of Lehman Brothers in September of that year. How seriously did the board contemplate the possibility that funding conditions could get much, much worse? And how credible was the assessment of the quality of assets that RBS had acquired the previous year with its acquisition of ABN Amro?
A cross-examination of the key individuals by a QC might reveal more than the colourless official report on the failure of RBS by the Financial Services Authority in 2011. That document, which concluded that no enforcement action could be taken against individuals at RBS, was fine as far it went. But it lacked the authentic voice of the individuals at the heart of action. The litigants don’t owe future historians anything – but they’d be doing them a favour by going ahead.
Will Ford’s management shakeup recharge its performance?
If you’re Ford and your market capitalisation has fallen below that of the electric upstart Tesla, you’re probably right to worry about investors’ implied judgment that your business model is vulnerable to technological innovation. So here’s the company’s big idea: kick out Mark Fields as chief executive and appoint the executive who has been running the part of the company responsible for Ford’s investment in electric and autonomous vehicles.
Chairman Bill Ford’s promotion of Jim Hackett sounds logical on paper and, it might be said, Fields cannot complain about being ejected. The company’s share price has fallen by a third during his three years in charge and GM is doing better in the production of conventional cars. The temptation for Ford’s board to do something dramatic will have been great.
Even so, this appointment looks odd. Hackett previously spent 30 years in the office furniture business at a company called Steelcase and has been running Ford’s mobility division for less than a year, which is too soon to tell if the investments in exciting new ventures will pay off or are merely exciting in the sense of being expensive.
Ford described Hackett as “a true visionary who brings a unique, human-centred leadership approach”. Maybe, but what was his big vision at Steelcase? “Hackett is recognised for predicting that the office landscape would shift away from cubicles to an open space environment,” says Ford’s biography of the new boss.
Anticipating the rise of the open-plan office was, no doubt, vital in office furniture game. But it’s not obviously a qualification for running a car company with 200,000 employees. We’ll judge Hackett only once he’s got to work – but one suspects Tesla founder Elon Musk’s status as the top visionary in the car industry is not under immediate threat.
LSE chief adds voice to Brexit roar
Xavier Rolet should keep shouting. The chief executive of London Stock Exchange thinks costs to investors could increase by €100bn (£86bn) over five years if the European Union, after Brexit, insists on moving large chunks of clearing activity to its own patch.
Clearing, in this context, means the settlement of financial transactions. It’s dull work (except when it goes wrong) and it is conducted on thin margins that are achieved by concentrating activity in one place. Split it all up and costs will undoubtedly increase.
A €100bn estimate should be enough to get the attention of even hardliners in Brussels. Rolet – a Frenchman, usefully – should be dispatched to give a breakdown in as much detail as he can manage.
