Win Bischoff To Chair Lloyds, Because Apparently There’s No-One Else Available
Lloyds are lining up Win Bischoff, still pretty fresh from being dropped by Citigroup, to be the new Lloyds chairman. As we saw recently, previous chair Victor Blank had to go lest the Lloyds shareholders release the hounds; his cocktail chat with Gordon Brown, persuading him to drop competition law and let Lloyds take over HBOS, has become one of the most infamous moments of the financial crisis (even though it might turn out rather well for Lloyds in the end). Now Bischoff has the task of placating investors and corralling Lloyds’ vast new asset pool.
Bischoff was chairman of Citigroup Europe before taking the full chair position in 2007, taking over from Clinton’s Treasury secretary Robert Rubin. When things got tough over at Citi, rumours started flying that Bischoff would get the chop, but Citi came out in November and publicly supported him. Losses were so bad though ($8.29bn in one quarter bad) that a scalp was needed to show they were doing something, anything, about the situation, and Bischoff fell on his sword in January.
Since then he’s been tooling around, making reports with Alastair Darling on how to steer the banking system between stifling regulation and absurd risk-taking, also saying that a splitting up of the investment and retail sides of banks, as has been much mooted recently, would be a silly thing to do. It looked like he could become chairman of UKFI, the Treasury company that manages national stakes in bailed-out banks, but it seems like there was no other decent candidates for the Lloyds job, and so the government, who own nearly half of the bank, bumped Bischoff up to the big job.
He’ll now be working with CEO Eric Daniels, whose position looked a little shaky amid the shareholder wrath, but who has been cemented in place by Gordon Brown. Bischoff’s reputation was damaged somewhat by the Citi fiasco, where it’s said that he didn’t guide Vikram Pandit enough – Daniels is more experienced than Pandit, but nevertheless shareholders and indeed taxpayers will be keeping a close eye on how he helps Daniels cope with Lloyds’ risky, unwieldy, and potentially anti-competitive assets.
It’s a slightly worrying appointment. Bischoff asserted a year ago that there was no “limit, in terms of management, in relation to size” – in other words, Citigroup wasn’t too big to fail, but could be managed despite its size. Even if Bischoff was a victim of circumstance to a certain extent, forced to leave a company that was plagued by the Charles Prince era, it shows that he is not fully comfortable working with a huge bank, which Lloyds undoubtedly now is.
How is the appointment of chairs being made? Simply on pedigree? Experience certainly counts for a lot in banking, but can the potential pool of suitors be so small that Bischoff is being considered for chair of Lloyds and Standard Chartered? As well as the mechanics of regulation, one lesson that could potentially be learned during the recession is how to change hiring practices. When the only man seen as a safe pair of hands has come from a bank that filed a record corporate loss only four months ago, you have to think you’re not looking hard enough.
Posted by Ben Beaumont-Thomas in Hot Money | July 1, 2009 11:35AM |
