Hornby leaves a bad taste
Lloyds Bank investors, employees and customers, who have suffered untold hardships since the financial crisis of a decade ago, have reason to feel bitter about the rise and rise of Andy Hornby.
As chief executive at the time of the HBos collapse and rescue by lloyds in 2008, he is living a charmed life, moving from one senior role to another, passing ‘Go’ and picking up multi-million payouts at each stop.
At a time when free market capitalism and inequality are top of the agenda for leftist and populist parties on both sides of the Atlantic, the career of Hornby offers an unvarnished view of what is wrong with the system. Unbelievably, a decade after the events at HBos, the banking regulator – the Financial Conduct Authority (FCA) – has still to offer a verdict on senior management culpability.
The wrecked lives that resulted from Hornby’s stint at the top of HBos are legion. When the merger was done, lloydsHBos went ballistic when it was suggested that up to 40,000 jobs could be lost.
In the event, the number of people thrown out of work turned out to be 55,000, and still rising. Investors in lloyds and those in HBos are the unlucky owners of shares worth a fraction of their value.
As for customers, it has been one nightmare after another. The wrongful sale of payment protection insurance by both banks has racked up a bill of £19.5bn.
A large-scale fraud has been uncovered at HBos’s Reading branch, where the TV host Noel Edmonds is among the victims.
As significant has been the damage to customers inflicted by a thousand cuts through branch closures, turned-off ATMs and second-rate service, especially for small business clients.
While all of this has gone on, Hornby has been on a business joyride. After an uninspiring stint at Boots where he picked up £2.1m for nine months’ work and then a further £2.4m when his contract was paid up, he landed at bookies Coral.
Because Hornby was not on the main board, we don’t know his pay. But what we do know is that, when ladbrokes, which merged with Coral, was eventually bought by Isle of Man-based GVC, Hornby collected £8m from a share sale.
Now he is to be chief executive of The Restaurant Group, with a pay deal worth up to £3.9m. Clearly, Coral and ladbrokes valued Hornby’s skills, and the board of The Restaurant Group thinks he has something to offer.
But shareholders in the Wagamama owner ought to be asking whether Hornby is a fit and proper person to be in charge of a public company. A judgment can’t be made because the FCA has failed to release details of its probe. A more prudent board, alert to good governance, would have recognised the pitfalls.
Lifting the gloom
As MIGHT have been expected, Brexit dominated the Bank of England’s inflation report. There was a tale of two economies.
on the one hand, consumers enjoying higher household income and continuing to spend in the face of uncertainty.
And the other – businesses preparing for Brexit by building stocks but unwilling to invest. In explaining this thesis, the governor Mark Carney cited surveys showing how uncertainty about Britain’s future relations with the EU damaged the confidence of firms, adding: ‘Who could blame them?’
The reality is that the world did not stop on March 29 and won’t do so on october 31 either.
Indeed, all the evidence is that, after wobbles at the end of last year, global confidence is rising on the back of a strong Us first quarter and a calming of trade tensions.
In the same way as households have chosen to enjoy the fruits of full employment and rising wages, so firms could react positively to better global circumstances and the odds on some kind of Brexit deal.
The gloom has gone on for too long and it is time that employer groups, such as the CBI, retreated from despond to find a better narrative.
Meat retreat
FASCINATING to see how vegan burger maker Beyond Meat has captured the zeitgeist. With Bill Gates and actor leonardo diCaprio among the cornerstone investors, its initial public offering has now put a value of £2.5bn on the enterprise.
That means it is worth almost four times The Restaurant Group. Funny, that.