How should we read a statement by George Soros? Carefully.

March 13, 2014

George Soros If I could outguess George Soros I would be very clever and perhaps very rich. But I can offer a few observations about his history which may help interpret his recent comments about a new financial crisis

When George Soros speaks, the financial world listens. He has been speaking in the UK this week [March 2014] of the next financial crisis that he says will come about in part a consequence of weak financial leadership in Europe, and in particular in Germany.

He is particularly remembered for an enormous financial coup as the pound Sterling crashed at the time of Black Wednesday [16th September, 1992]. His success then was through a daring short-selling operation which can be admired for its daring or condemned for its contribution to a global economic crisis. Since then, his espousing of various social causes has led him to be pronounced ‘a dangerous leftist’ by Human Events’ readers, who in an online poll, recently voted him “the single most destructive leftist demagogue in the country.”

Soros is a big player

George is a capitalist superstar or a dangerous leftist supervillain. He may be speaking as an old man and a noted philanthropist concerned only to warn us that Europe is heading for yet more financial trouble. He may be speaking to avert or reduce such a crisis. He may be speaking with no personal agenda.

Or he may have the motives of a inveterate speculator

Or he may have the motives of a inveterate speculator, the gamester whose actions always designed to “tell” what he wants to reveal.

Or he may be plugging his new book

Or he may be plugging his new book, The Tragedy of the European Union, which was published this week, and which itself aligns with his libertarian political philosophy and his altruistic efforts.

Putting lipstick on a Rottweiler

To rephrase a term expressed by the American politician and folk philosopher Sarah Palin, you kin put lipstick on a Rottweiler but underneath it’s still a goddam Rotweiler .

Note to my students

I am not a supporter of either/or logic in assessing complex socio-economic issues. George Soros needs to be studied as a successful thought leader who shows consistency only in his skills of revealing what he wishes to reveal.


Archbishop goes to war, gets bruised

July 27, 2013

The Archbishop of Canterbury hits the headlines with an attack on money-lenders and gets bruised in the first week of battle

The story broke this week as the newly appointed head of the Church of England declared war on the so-called payday credit firms. Interestingly, the remark was part of a far more widely-ranging interview for Total Politics magazine. The story that hit the headlines [July 2013] was seized upon from one paragraph:

A plan for the church to develop credit unions has been floated, with Welby proud that the church is “putting our money where our mouth is” in developing an alternative to payday money-lenders. The plan, he says, is to create “credit unions that are both engaged in their communities and are much more professional – and people have got to know about them.”
It will, he adds, be a “decade-long process”, but Welby is ready for the battle with the payday giants. “I’ve met the head of Wonga and I’ve had a very good conversation and I said to him quite bluntly we’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence.” He flashes that smile again. “He’s a businessman; he took that well.”

Battle had been declared

Within days the militant archbishop was on the defensive, as it was revealed how the Church had investments which were with dubious ethical operations. Protests that the investments were very tiny hardly quelled the storm in an ecclesiastic and financial teacup.

The shallowness of the debate was illustrated by BBC Newsnight’s weary efforts [Friday 26th July 2013] with church spokesperson, payday-loan spokesperson and Jeremy Paxman’s stand-in contributing to an inept effort to offer any reasoned contribution.

Fighting for the moral high ground

Welby, going the rounds of the media, had admitted to being embarrassed. It takes more than four months to master the art of avoiding the pitfalls of interviews when seeking to achieve the moral high-ground. His unusual background as a financial executive was not sufficient training.

The archbishop presumably wanted to introduce his visionary plans for the church under his leadership. He finds himself fighting his first hand-to-hand pitched battle with the forces of darkness.


Charlotte Hogg appointed hew Chief Operating Officer at the Bank of England

June 21, 2013

Charlotte Hogg, new COO of the Bank of EnglandMark Carney, the incoming governor, has appointed Charlotte Hogg as Chief Operating Officer of The Bank of England running all day-to-day management functions.

The news this week [June 19th 2013] suggests evidence of changes accompanying the arrival of the new governor of the Bank of England.

Whenever a banker is appointed or leaves, the public is avid for further evidence of the cupidity our financial leaders. In this case, the figures speak for themselves. She will work for the same salary, £260,000 salary p.a. and benefits as the Bank’s three deputy governors. Last year she is reported to have earned, with bonuses, £2.5m in her senior post in Santander

According to the BBC

Charlotte Hogg, who like Carney studied at Oxford and Harvard, started her career at the Bank before moving to McKinsey in Washington. She has also worked at Morgan Stanley, before joining Experian as head of its operations in the UK and Ireland.
Hogg is descended from one of Britain’s most high profile political families. Her mother is Baroness (Sarah) Hogg, a senior adviser to Sir John Major when he was prime minister. Her father is Viscount Hailsham, the former Tory cabinet minister Douglas Hogg, who gained notoriety when he stepped down as an MP after claiming £2,200 expenses for cleaning the moat at his 13th-century country estate. Her paternal grandfather was Lord Hailsham, a former lord chancellor. “You can have too much of a good thing in one family,” Hogg once told her local newspaper.

Paul Tucker, the Bank’s deputy governor for financial stability who lost out on the top job to Carney, announced his intention to leave the Bank last week. Prior to Charlotte Hogg, the most senior woman at the Bank was Rachel Lomax, who served as a deputy governor from 2003 to 2008.

One small step for Charlotte …?


Steven Hester: A good leader in a bad place at RBS

June 15, 2013

This week Stephen Hester was removed from his post as CEO of the Royal bank of Scotland. The decision seems more politically than financially inspired

LWD has followed the RBS story since Steven Hester’s arrival in 2010. Steven Hester: Villain, hero, or just an outstanding business leader?. The post is summarized below:

Royal Bank of Scotland took its turn this week as another giant banking institution paying ridiculous bonuses while still in hock to the Government’s bail-out scheme. Its leader Steven Hester is reviled as another fat-cat financial leader insensitive to public opinion. Contrition is a rather hard emotion for a leader to fake. So when one of them appears to be making a good fist of apologizing without appearing a pathetic wimp and maybe a bit of a damp rag as a leader, it’s worth taking a more careful look. The broadcast [March 2010] showed the BBC’s Hugh Pym asked RBS’s CEO Stephen Hester, why were there still such big losses for RBS. In three minutes, Henson left me with the impression of someone capable of a mix of toughness and sensitivity as a leader.

Later

Three years later it was well-known that he had taken a cut in earnings to take on one of the most challenging jobs in the Financial world and that the bank has made an impressive turnaround under his leadership.

The politics of Hester’s dismissal

Chris Blackhurst, Writing in The Independent, offered an explanation for Hester’s departure.
that the Chancellor now needed a more compliant leader in the run up to privatization of RBS. He points out that under Hestor’s leadership the bank improved its balance sheet to the sum of a staggering trillion pounds sterling.

As a result of volunteering, he’d become a public figure, his private life dissected, his country house photographed from a helicopter. A snap of Hester in the garb of his pastime of fox-hunting was wheeled out to traduce him as “another fat cat banker on the make, except this was one who was now being paid by us, the taxpayer”.

Yet, he’d chosen to do it and was sticking with the task. So, why wasn’t I surprised at the announcement of his going? Because his face never fitted. Behind the scenes, Hester could be an awkward customer. Softly spoken and eloquent (for a banker), he was strong intellectually, fully prepared to speak his mind, not prepared to lie down easily in front of politicians and civil servants without banking experience and know-how.
Osborne made plain his wish to be seen to begin the process of privatization in 2014 – in other words, well in advance of the 2015 general election. Hester indicated he would stay until 2015 when the bank was expected to be restored to profitability – after that, though, he was unlikely to want to remain any longer.

Hester’s reluctance has been used to oust him. It’s a fig leaf, as is the notion that while he was good at cutting he’s not someone who knows how to grow a business and he’s not a natural front-of-house salesman of the sort who would persuade [the general public] to snap up the shares. Having steered Hester to and through the door, Osborne must now find a successor. It won’t be easy.

The stock market agreed. This week RBS shares tumbled.

The sloppy and amateurish manner in which Hester’s departure was handled cost UK taxpayers dear as the shares tumbled at the market open on Thursday [14th June 2013], down almost 8.5% at one point as investors made their feelings clear at the bizarre turn of events.

Dilemmas

The story makes interesting material for business students interested in dilemmas and interpreting the decisions made by leaders.


HBOS Leadership without the benefits of hindsight

May 10, 2013

180px-ripvanwinkle.jpg The following post anticipated the financial crisis of 2007-8 under an earlier title. HBOS changes: Too little, too late? It is reissued following the news this week of the fall from grace of the bank’s three leaders

Over the last few weeks, pressure has increased on HBOS executives following a government report and calls for former CEO James Crosby to give up his knighthood and part of his pension rights. The Original post indicates the perspective in 2007.

ORIGINAL POST

This week [Nov 2007] saw a little-heralded leadership change in the retail division of the financial giant HBOS. When a bank changes one or two members of its management team, it does so to reassure investors of continuity as well as to signal change. Has HBOS been too complacent over its business environment? Are the changes too little, too late?

According to a BBC report this week:

HBOS has announced a revamp of its retail division, including the departure of its head Benny Higgins … finance director Phil Hodkinson will [also] retire at 50 next year, and will be replaced by a former incumbent, Mike Ellis …”The structural changes we have introduced in our retail business are right for the group,” said chief executive Andy Hornby. Mr Higgins, who moved from Royal Bank of Scotland last year to head the retail unit, will leave HBOS at the end of 2007. [CEO] Mr Hornby told the Reuters news agency that Mr Higgins’ departure was not related to a recent 8% drop in profits at the retail unit. The business was hit by a sharp drop in its share of mortgages earlier in the year after a new pricing strategy went wrong, although the bank says its share has since recovered.

So there we are. No change there, then. Banks are as prone to jolts and change as any other business. Arguably they have become as accustomed to dealing with change as companies in many other business sectors. Their corporate advertising increasingly seeks to present images of innovative and dynamic set-ups. Yet, they also work hard at maintaining a corporate image of stability and reliability. Which just goes to show that effective creativity in advertising can be pretty challenging. How would you send out a convincing signal that you are reliable and adventurous, dynamic and prudent?

HBOS doesn’t stand for anything

I used to think of HBOS as an abbreviation for two big names in Banking after a recent merger, namely the Halifax and Bank of Scotland. Wrong. The (usually) reliable Wikipedia tells me we shouldn’t connect it with some earlier entity or entities. Same with ICI. which is initialized not an abbreviated Imperial Chemical Industries. Anyway, let’s just say that what is now HBOS used to be the Halifax Building Society of Halifax, Yorkshire, and The Bank of Scotland of Edinburgh.

Background to the story

Earlier this year [2007] the bank announced satisfaction with its profits. CEO Andrew Hornby said HBOS was optimistic about the UK economy and growth in its main markets, and that the UK business environment was “generally benign”.

How benign is benign?

Hornby’s view was not widely shared

“Overall the quality of these figures looks poor and the guidance of 2007 on loan growth, margin, costs and bad debt looks disappointing,” analysts at Fox-Pitt, Kelton said in a note

. AS it turned out, the HBOS retail business environment was to prove far from benign. Over Christmas 2006 there had been unfortunate publicity for the bank’s role in the sad tale of the collapse of Farepak. In 2007 it became clearer that the shared business model of the retail banks was failing. This relied on offering ‘free’ retail banking, partly subsidized by high charges for non-agreed overdrafts. HBOS faces substantial losses. It also proved non-competitive in mortgages, and failed in its retention strategy.

Anatomy of a high flier

In 2005, CEO Andy Hornby was assessed as one of the FTSE’s ‘power players’ for among other things being remunerated with ‘biggest directorship’ of the FTSE 100 at around £ one million sterling for his HBOS responsibilities. The young city high-flier was a former Blue Circle and Asda executive, and could take credit for his part in steering through the HBOS merger successfully. The deal was a coup for The Halifax. However gently the merger was presented, Halifax emerged with the better hand. Hornby became its CEO, and Lord Dennis Stevenson (another Halifax man) became Chairman of the new company. The Bank of Scotland had recently lost out in several take-over bids, including its wooing of National Westminster Bank, when it had lost to its bitter rival, the Royal Bank of Scotland.

What’s going on?

Perhaps researching this blog has made me over-sensitive to leadership battles. But the story leaves me with just that suspicion that there is more to unfold. Has HBOS been complacent over its business environment? The kindest that can be said was that it did not rush into hasty action recently. More unkindly, maybe it could be accused of being too reactive. I haven’t picked up the signals of stakeholder discontent that indicate real ‘trouble at the top’. No comments about excessive remuneration packages. But those city analysts have already sent out signals suggesting the business environment is not as benign as HBOS would like it to be. I have a very small shareholding in one of the group’s financial products. I’m not planning on selling. I’m not planning on acquiring any more either. And maybe there will be a business case to be written on leadership style and proactivity.


Antony Jenkins leads a transformational programme ['RISES'] at Barclays

April 27, 2013

By Nigel Aldcroft

Antony JenkinsAntony Jenkins has been Group Chief Executive of Barclays PLC for less than a year and has already made quite an impression within the company. His RISES programme is accompanied by nearly 4000 job losses

A recent article in Business Week suggests that Barclay’s self-described ‘transformational leader’ [image above] faces a number of key dilemmas.

Banking Turnaround

Amid the recent banking scandals, and in an effort to turn Barclays around, Jenkins has announced that following on from a recent strategic review he intends to reduce headcount by at least 3,700 this year across the group as part of the new ‘Transform’ programme.

He recently introduced a plan which creates the positive sounding acronym ‘RISES’ [Respect, Integrity, Service, Excellence and Stewardship]. These are not values that immediately spring to mind in banking, yet progress can be seen at most Barclays’ offices.

Jenkins has taken a no-nonsense approach telling staff to ‘shape up – or ship out’ This abrupt and clear approach suggests symbolic leadership signals.

Public Views on Banking

The public opinion of the banking industry in the UK remains negative Jenkins has made publicly clear that each of the 140,000 employees must live the values, or quit .

No doubt his efforts to restore public confidence and restore image will be no easy task. The decision to cut at least 3,700 employees would not have been taken lightly. Quite simply Jenkins has the unenviable task of improving shareholder value and balancing business performance with public opinion.

I have seen enough global redundancy announcements from my own experience to know that if people feel under threat or insecure or uncertain at work; morale drops and productivity decreases.

The announcement of job cuts is consistent with Barclays’ plan to deliver sustainable returns. Now that Jenkins has communicated this to all stakeholders, although no comfort to those members of staff affected, it provides clear rationale behind the decision in a time of environmental turbulence.

Friends in High Places

Jenkins is not afraid of being in the public spotlight and helping others. In October [2012] he shared the stage with the likes of charismatic leader Bill Clinton, the well-known former US president at The One Young World Summit, where he gave speeches to aspiring young leaders. This reflects positively on Jenkins social and ethical leadership focus, which he is trying to re-instil throughout Barclays.

Win, Lose or Draw

If successful in his leadership, stakeholders will be happy, share price will increase, consumer confidence will be restored, and employees will be positively aligned with the new values.

The fact remains however that public perception of a man with a base salary in excess of one million pounds, and multi-million pound bonus and share options will remain under public scrutiny. Stakeholders expect this leader to deliver and at the end of the day he is ultimately responsible for the turnaround.

About the author

Nigel works for Siemens Energy, and is studying on the Finance Accelerated Global MBA Course at Manchester Business School. His pleasures include travel. The blogpost was developed from a leadership assignment he carried out on the course.


Drugs, the silk road, and new money-laundering systems

April 16, 2013

BitcoinThe market in illegal drugs continues to keep a step ahead of efforts to control it. New technology is already being applied to complement or replace older practices of money laundering

In researching the rise of new technology banking, I came across the rapidly-growing Bit Coin system. It struck me as interesting to those engaged in nefarious operations such as drug trafficking. I was not surprised to learn that the idea had already occurred to others.

According to its own website

Bitcoin is a digital currency, a protocol, and a software that enables instant peer to peer transactions, worldwide payments, low or zero processing fees, and much more.
Bitcoin uses peer to peer technology to operate with no central authority; managing transactions and issuing Bitcoins are carried out collectively by the network. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment systems.

How does Bitcoin work?

The International Business Times offers a nice explanation of how bitcoin works

April 16-17th

Paul Krugman in the International Herald tribute writes of The fallacy of bitbugism. Further insights were provided in a BBC review.


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