John Kingman Has Finally Had Enough Of The Public Sector, Is Off To Make His Fortune

We recently looked at the annual report from UKFI, the company set up in a wee corner of the Treasury to look after government-held stakes in banks, and all the billions of taxpayer money they entail. We noted how very small the salaries were, either nothing at all, around the £40,000 mark, rising to £140,000 for the chief exec, which is piddling for what is in effect an investment bank. Now it looks like UKFI chief exec John Kingman looked at his own report, the scales fell from his eyes, and he cried “what am I doing?”, because he’s quit the post and is off to the private sector.

Kingman apparently found the public sector more “fun”, but yachts and early retirement are also “fun”, so the move is understandable. The rest of the UKFI gang had come from lucrative careers in the private sector, before doing some public time to buff their legacy; Kingman has almost always been a civil servant, so we probably shouldn’t be too hard on him wanting to make a pot of money at this point in his career. Still, you might have thought he’d at least wait until Northern Rock was released back into the wild; they’ve been courting smaller banks like Virgin Money in order to broaden the competition in the now very small world of high street banking, but any deal is miles away from being settled. Vince Cable said yesterday: “His departure at this time will leave a massive hole.”

At the same time as Kingman leaving, UKFI finally appointed a chairman in the form of Sir David Cooksey, who takes over from acting chairman Glen Moreno, who’s ended up being in the job for six months. Cooksey is a UK business legend, founder of £500m-strong venture capital unit Advent, and a director at places like the Wellcome Trust, London and Continental Railways, and ENRC. Again, he’s not taking the position for the money – his salary is just £100,000.

The difficulty for him now is the political sensitivity of hiring the next chief exec. The candidate is likely to come from the private sector, like a bank or hedge fund, given Cooksey’s relative lack of banking experience, but such a person would need to take a huge wage cut if their salary was to match Kingman’s. Being UKFI chief exec next year is a rather thankless task, negotiating around a general election and a potential power shift, as well as applying ongoing pressure on banks to provide credit while keeping out of their affairs as the UKFI has said it must. So a private-sector-sourced chief exec will demand more money; expect indignant headlines and political point-scoring over the perceived lack of value that UKFI is providing the taxpayer by paying higher wages.

Equally hard is the conundrum of where to source the post from. would any former banker be able to do anything but act punitively towards his former peers without accusations of backscratching and nepotism? If a banker wasn’t chosen though, the appointment would be open to accusations of irrelevance and lack of experience. Wanted: formerly well-paid person for task that will prove impossible to please everyone with. Any takers?

Posted by Ben Beaumont-Thomas in Hot Money | July 29, 2009 10:48AM |