Should HSBC stay or should it go? Maybe a clean break would be best
|
Version 0 of 1. At Mansion House on Wednesday night, the question was simple: will they or won’t they? The day before, HSBC had set out its stall with 8,000 UK job cuts and a rebranding of its branch network that made the transfer of its headquarters back to Hong Kong look a formality. In his speech, George Osborne could not find the words to commit to a review of the banking levy, which is a big, but far from the only, push factor for the bank. Presumably, offering a sop to a company that had dealt a blow to his peerless record for shrinking the dole queue would have looked awkward. Some in the City think a giant institution the size of HSBC is worth sacrificing if the loss of tax revenue and dent to London’s reputation as a financial services hub is sufficient for politicians to soften their stance towards those that remain. Others believe that the banks still here would be squeezed to make up the tax shortfall. I think we are heading towards a compromise whereby the Treasury will make just enough positive noises to keep HSBC in Canary Wharf. I can’t help thinking a clean break would be better all round. The chances of Diageo, maker of Smirnoff vodka and Tanqueray gin, being gulped down whole by an overseas predator is the stuff of fantasy. So too is the notion that Deutsche Telekom might favour a multibillion-pound merger with its British counterpart BT. But that both tales, and many other market whispers, have moved share prices this week shows that we have come almost full circle back to the mergers and acquisitions boom of 2007. Back then, cheap debt fuelled takeovers across industry sectors and borders. Some bloomed, like Alliance Boots being taken private. Some bombed, like Guy Hands’ takeover of the music group EMI. Last time, after the boom came the bust. Might it again? Not for a while at least – there is a higher proportion of equity in most deals. Debt is cheap but not being offered at crazy multiples. What is driving the rumour mill is animal spirits, and there is no sign of these being calmed. Stand by for a summer of tall tales. If more evidence were needed that the eurozone operates at a pedestrian pace all of its own, one need only look at the departure of Anshu Jain from Deutsche Bank this week, to be replaced by John Cryan. That the trading bloc’s second-biggest bank must head back to the drawing board with its strategy says as much about the failings of its dual-leadership structure under Mr Jain and Jürgen Fitschen as the failure of politicians and regulators to turn the page on the financial crisis. Otherwise, the last man standing in European investment banking – after Barclays pulled back – might be getting on with the business of competing with Wall Street instead of wondering what to do with its retail arm or whether it must raise more capital to bolster its balance sheet. Stuart Gulliver at HSBC and Antony Jenkins at Barclays are both having a second go at plotting the best way ahead in the new world of banking. How long will it take the Cambridge-educated Mr Cryan to get it right? The good news from this week’s shuffle is that, along with Tidjane Thiam arriving at Credit Suisse, British financiers – or those who forged their careers in the City – are an exportable commodity once again. Nick Varney can be combustible at times but the response of Merlin Entertainments’ chief executive to the Alton Towers crash has been textbook. The theme park giant was bang to rights when four people were seriously injured in a crash on the Smiler ride 11 days ago, with one suffering an amputation above the left knee. Such incidents should never happen, but when they do, the clean-up speaks volumes. Where some bosses might have chosen to delegate the media response to a lackey, Mr Varney took to the airwaves to speak about his company’s safety procedure – or lapses thereof. Merlin has kept in close contact with the families of the injured, hand-delivering letters that accept full responsibility for the crash and suggesting they instruct a lawyer so compensation claims can be dealt with quickly. It is almost as though Merlin read the Thomas Cook customer relations handbook and did the exact opposite. Not only did the holiday company fight the parents of the two children killed by a carbon monoxide leak on holiday in Corfu nine years ago, but now successive chief executives of the group are briefing against each other as to who behaved worst in that sorry story. The revolt over Sir Martin Sorrell’s pay was underwhelming. The WPP chief’s remuneration is getting bigger but the votes cast against it are falling. Either the shareholder base is resigned to massive deals or those who objected before have sold the stock. Either way, I wonder if the rebellion will take off again next year when by my estimations Sir Martin’s £43m pay will be eclipsed by something nearer the £60m mark. |