Mark Kleinman gets the Square Mile talking in his weekly City A.M. column: this week on the CBI’s latest travails, a two-horse race at Co-operative Bank and a search for a charity chair
Chancellor’s lifeline for flailing CBI
Forget about a toast, they’ll be erecting a statue of Jeremy Hunt at the CBI’s City HQ if it survives the latest chapter of its annus horribilis.
The chancellor’s decision to meet director-general Rain Newton-Smith in the run-up to November’s autumn statement may just have provided a lifeline to the business lobby group, whose cash reserves are flashing a very angry red.
As I reported yesterday, NatWest Group is now considering rejoining the CBI, largely on the basis that it may be regaining some semblance of political influence.
Still, the self-styled ‘voice of business’ is far from out of the woods. It still needs to seal an emergency funding package, while Make UK, the manufacturers’ body, has donned the guise of a wolf in sheep’s clothing, presenting its financial strength as a safe haven to a CBI flirting perilously with insolvency.
Beyond preserving the corporate entity of what was until recently Britain’s most influential business lobbying group, though, it’s hard to see why any tie-up of this nature makes sense.
Many CBI members, both individual corporates and trade associations, believe the manufacturing bias that such a tie-up would inculcate would render the organisation redundant as a voice for those outside the sector.
It’s a shamblesOne corporate chief
One corporate chief told me: “Going into an election year it is really important that we have a strong collective voice for employers and business bit that only works if it is economy wide and with a predominantly service and consumer-led economy a more narrowly focused manufacturing driven organisation makes little sense for business let alone politicians.”
Another member – complaining about a pledge of greater transparency that was swiftly followed by restrictions placed on access to a member update conducted virtually in place of a full-blown AGM – put it more succinctly: “It’s a shambles.”
June’s vote in favour of Newton-Smith’s plea for members’ support was supposed to represent a moment of renewal for the CBI.
It has been anything but. Instead, the organisation has been hollowed out, with most of its overseas offices being earmarked for closure and a sizeable chunk of its workforce being made redundant.
Why the Treasury has suddenly changed tack on Hunt’s stance is unclear. Five months ago, he said there was “no point” talking to the CBI because its members had deserted it; now, with fewer members, resuming contact seems illogical.
Even some of its own peers say they will not meet the CBI until a police investigation into allegations of sexual assault is concluded.
The last few months have illustrated a Frank truth about the landscape of the UK’s biggest business representative organisations: they can be as ruthless and cut-throat as the rest of the private sector. It’s not obvious why the government should be a facilitator of the CBI’s survival.
Looks like a two-horse race for Co-operative Bank
It was the bank nobody wanted to own. A litany of incompetent decisions spearheaded by arguably the least qualified chairman of a British lender in history, hostile market dynamics and souring investor sentiment left the Co-operative Bank as a zombie company for years. At least one auction took place where the only bidder was Cerberus Capital Management – a fact which spoke for itself.
Now, the Co-operative Bank’s travails of the last decade finally look to be behind it. And the lender’s board, management – and, yes, its hedge fund investors – deserve credit for their patience during a turnaround which scarcely looked possible when it twice lurched towards financial collapse.
Early next month, the scale of its transformation will be underlined when the Co-operative Bank receives a number of solvent takeover bids as part of a process being run by PJT Partners and Fenchurch Advisory Partners.
One, as I revealed on Sky News earlier this week, will be from Aldermore Group, the South African-owned lender which recently posted a strong set of full-year earnings. Well-placed industry sources believe Aldermore, which is being advised by BNP Paribas, is the favourite to clinch a deal that could value the formerly mutually owned lender at about £800m.
It will face competition though. Shawbrook, the SME lender, has already tabled a pre-emptive bid to trump rivals by proposing a largely stock-based deal that would create a bank worth about £3.5bn.
Sources tell me that one of the structures Shawbrook is examining involves it reversing into the Co-operative Bank to avoid a punitive fair value adjustment to the high street lender’s mortgage stock.
Other rumoured bidders – OneSavings Bank, Paragon Banking Group, Nationwide, NatWest Group, Metro Bank and Virgin Money – could yet be serious contenders, but for a variety of reasons they look like having ‘Did Not Start’ next to their names.
Still, a two-horse race is better than pulling up lame, which was the Co-operative Bank’s state of existence for so long.
The hunt is on
It’s eight weeks since Dame Alison Rose stepped down as chief executive of NatWest Group, but the dust shows no sign of settling, with key decisions about her payoff and any regulatory sanction outstanding.
I can also reveal today that her imbroglio with Nigel Farage cost her another – albeit unpaid – role. Sources close to the bank say Rose was being lined up as the next chair of Business in the Community, the business-led charity.
Her withdrawal from the appointment process, which took place just before the NatWest board changed its tune and decided she should leave the bank, left BitC back at the drawing board in the search for a successor to former BT Group chief executive Gavin Patterson.
Given its habit of appointing serving CEOs of FTSE-100 companies, it could do worse than looking elsewhere in the UK banking sector and target Charlie Nunn at Lloyds.