The list of business leaders who have damaged their careers with a single word famously begins with Gerald Ratner, who wiped half a billion off the value of his jewellery chain in 1991 by describing one of its offerings as ‘crap’. Then there was Bank of England deputy governor Ben Broadbent, whose chance of succeeding Mark Carney plunged after he picked ‘meno-pausal’ to describe an economy past its productive peak. Now Standard Chartered chief executive Bill Winters has blighted his remaining time in post by telling shareholders they were ‘immature’ to have voted against his massive pay package.
Having built his career with JP Morgan before joining Standard Chartered in 2015, Connecticut-born Winters used to be seen as one of London’s most level-headed bankers; hence his appointment to the Independent Commission on Banking after the financial crisis. His recent tantrum was provoked by opposition to a £474,000 payment in lieu of a pension contribution — in the teeth of criticism of lavish boardroom pension perks at a time when most employees’ pension rights have been slashed. Investors’ views of Winters (whose total pay adds up to almost £6 million) are coloured by the fact that Standard Chartered’s market value has shrunk by a quarter since he joined.
I have no doubt what he meant by ‘immature’ is that UK shareholders in an international banking business should realise, as their US counterparts do, that they need to offer globally competitive rewards for top talent without quibbling over details — the subtext being that Winters would be earning much more if he had taken an equivalent job in New York rather than accepting the challenge of trying to extract Standard Chartered from the mess left by his predecessors. But unless he conjures a sudden dramatic uplift in Standard Chartered’s recently faltering return on equity, I suspect the clock is now ticking towards the end of his tenure — because the way that ill-chosen word sounded to City ears was more like ‘Kiss my ass, you limey whingers’.
The naming of the next governor of the Bank of England is a pressing decision for the new chancellor, who may or may not make his pick from a shortlist left in the desk drawer by Philip Hammond. Betting has suddenly swung behind genial pro-Brexiteer Gerard Lyons, who was economic adviser to Boris Johnson as mayor of London. Betway priced him at 6/4 on Monday ahead of previous frontrunner Andrew Bailey, whose odds of 11/4 are likely to lengthen as criticism of his leadership of the Financial Conduct Authority intensifies.
Meanwhile the female candidates seem to have faded and the hottest tip from overseas, former Reserve Bank of India governor Raghuram Rajan, has ruled himself out on the grounds that the job has become too politicised. He’s right about that: among politically connected names floated in recent days is the multimillionaire money broker and former Tory treasurer Michael Spencer. That’s surely a squib — as I should know, since it was this column in 2016 that invented the candidacy of Jacob Rees-Mogg only to find the idea bouncing around the global media a few days later.
In that spirit, let me throw in another one: former chancellor George Osborne. He backed Boris for leader, he’s reported to fancy a return from journalism to a position of power and to have pitched for the top IMF job: so why not the governorship? Let’s see whether the rumour catches fire.
If I say the government has launched a consultation on Regulated Asset Base (RAB) funding for new nuclear power stations, you’ll probably skip straight to the next item, which is about gin. So I’ll keep it simple.
The UK’s eight existing nuclear plants provide one fifth of our power, but seven of them will have gone offline by 2030. To achieve ‘net zero’ emissions by 2050, we’re going to need new ‘firm’ (that is, constantly available) low-carbon generating capacity alongside wind and solar — which means new nuclear, or gas with carbon capture and storage. The one nuclear plant currently being built, Hinkley Point C, will produce very expensive power to compensate its investors, EDF and the Chinese, for carrying all the risk.
The RAB model, by contrast, shares risk between investors and consumers, making it easier to attract private capital. Applied to the proposed Sizewell C station in Suffolk — a replica of Hinkley Point, so easier and quicker to build — RAB could produce substantially cheaper power while plugging another big hole in our looming energy gap. That’s the argument in brief, and with so many of the nation’s other capital projects currently in chaos, I’d say it’s worth hearing.
Gin fever peak
A perfect wedding in the Cotswolds this weekend made me feel that England may not be going to the dogs after all. The hats were as elegant as the speeches, the youngsters all seemed to have proper jobs, and there was even a nod to diversity in a reading from Bob Marley (‘He’s not perfect’). But one surprise was that the marquee dinner tables were named after gin brands. Finding my place on ‘Bombay Sapphire’, I reflected on the extraordinary marketing triumph that has taken annual UK gin sales from £630 million in 2011 to more than £2 billion this year — and afterwards I read that national ‘gin fatigue’ may at last be setting in, as evidenced by falling sales growth for Fever-Tree tonic water.
Some readers like to remind me that Fever-Tree’s rocketing Aim-listed shares rose by another 50 per cent after I described them in early 2018 as an investment ‘to be thinking of selling soon’. Since last September they have almost halved again, so I claim I was wrong only in being early — but I won’t risk another prediction. Let’s just say that on Saturday night I think I spotted the zenith of the decade-long gin craze.
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