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RBS signals government could sell taxpayer stake next year

Category : Business

Bailed-out bank’s chairman uses strongest language yet to talk of sale, as RBS reports first-quarter profits of £826m

Royal Bank of Scotland has given the clearest signal yet that the government is preparing to sell off part of the taxpayer’s stake in the bailed-out bank next year.

As the Edinburgh-based bank reported a profit of £826m for the first quarter compared with a £1.4bn loss the same time last year, its chairman, Sir Philip Hampton, said RBS could be ready for sale from the middle of 2014 – or even earlier.

But the return to profit, and talk about a return to the private sector, did not impress the stock market. RBS shares were the biggest fallers in the FTSE 100, dropping 5.5% to 289p, a level that represents a £19bn loss on the £45bn ploughed in by the taxpayer during 2008 and 2009.

The decision to sell the 81% stake rests with the Treasury and the disposal is expected to take place in a series of tranches over a number of years. Hampton used more definitive language about the prospects of a share sale than he did at the results in February, issuing a video message in which he said drawing up a prospectus for shareholders could be achieved from the middle of 2014. “It could be earlier … we think the recovery process will be complete in about a year or so’s time,” he said.

A prospectus contains all the details about the bank’s financial performance and would be needed to be sent to prospective shareholders if the shares are to be sold off.

An uncharacteristically upbeat Stephen Hester, who became RBS chief executive at the time of the October 2008 banking crisis, said the group was “back in profit … a big change on recent times”.

Some £900bn has been taken off the bank’s balance sheet which was £2.3tn at the time of its bailout.

But Ian Gordon, banks analyst at Investec, said: “We were quite bemused listening to RBS management describe the business as ‘ready for privatisation in 12 months’. It is ready now – it was ready three years ago – surely the only issue we are actually discussing here is the price.”

The average share price at which taxpayers bought the stake in the bank was around 500p, although a figure has since emerged of 407p, which was the average price of the shares on the stock market on the days the shares were bought.

Hester, who described the possibility of privatisation as a “terrific thing for the country”, conceded that some of the share sales could take place at a loss. “There may well be a cogent case for starting at a lower price but I believe the average price can, and should, be above the government purchase price,” Hester said.

The slow economy and tougher regulations had made all bank shares less valuable, Hester said, but he insisted he was not complaining about the regulatory changes facing the industry. “It is our view that privatisation would be a terrific thing for the country psychologically and in terms of taxpayers money be freed up for other needs,” Hester said.

The parliamentary banking standards commission could still call for the break-up of RBS into a good and bad bank. Such a decision should be for the government, Hester said, but he did not dismiss the idea out of hand.

Even though RBS was back in profit, the City had been expecting a stronger performance and was surprised by the sharp downturn in the investment bank’s profits. “Underlying trends are weaker, with [group] operating profit of £800m – down 28% – a £400m consensus miss. The markets [investment bank] division [pre-tax profit down 64%] looks awful,” said Gordon.

Hester has been under political pressure to scale back the investment banking division and focus RBS on helping grow the domestic economy.

The bank did not make an additional charge for payment protection insurance on top of the existing £2.2bn it has set aside, although it ring-fenced an extra £50m for insurance rate swap mis-selling. It is also falling behind in selling off the 316 branches that it has been instructed to by Brussels and signalled a stock market flotation of the branches under the revived Williams and Glyn’s brand could take place in 2015.

The bank is also still waiting to learn the size of any fine for money laundering offences in the US and warned it could have a “material adverse affect” on future results.

Big five UK banks rue ‘dire year’ as £11bn of fines erase profit gains

Category : Business

PPI scandal and fines undermine improved performance at Barclays, HSBC, Lloyds, RBS and Standard and Chartered

An increase in profits at the big five UK banks was wiped out by more than £11bn of fines and compensation payments in 2012.

Despite an improved core business performance, fines from regulators and the costs of the mis-selling of payment protection insurance contributed to a 40% cumulative drop in profits from 2011 to £11.7bn, according to accountants KMPG.

Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered posted results in a year where bleak headlines included the Libor scandal, the mis-selling furore, and slack control of money laundering.

KPMG’s bank performance benchmarking report concluded that banks had improved in their core performance due to better credit performance, or fewer bad loans, and stronger results from investment banking divisions, helped by more positive sentiment over the eurozone’s future.

Alongside the punitive costs banks incurred, profits were also written down because of a £12.8bn revaluation of the banks’ debt. Bill Michael of KPMG said: “Banks had a better performance year in 2012 but their improved core profits were eaten up by fines and other exceptional items. In terms of their reputations, 2012 was a dire year. This is why it is so important for them to address cultural and ethical perceptions and issues. Restoring customer trust is critical.”

KPMG warned that banks would need to significantly reduce costs to convince shareholders they could continue to generate strong returns, including cutting staff and wage bills.

The warning comes amid reports that Lloyds, bailed out by the taxpayer during the credit crunch, paid more than 20 of its staff more than £1m last year. Details of its high earners will be revealed in its annual report this week, but the bank said it could not comment on speculation.

FSA to set out proposals for new banks to challenge high street ‘big four’

Category : Business

Proposals to be unveiled as Bank of England announces its estimate of the size of capital shortfalls at the UK’s major lenders

Proposals to allow new banks to challenge established high street players will be announced this week, as the Bank of England prepares to announce the size of any capital shortfalls at the major lenders.

The Bank’s financial policy committee (FPC) estimated in November that banks could have a £60bn hole in their capital if they made more objective assessments of the losses they faced. The FPC’s pronouncement on the actual size of the shortfall are expected on Wednesday, shortly after the Financial Services Authority (FSA) sets out proposals to enable new banks to be set up more easily by allowing them to hold less capital than high street institutions.

The creation of new banks to challenge the “big four” of RBS, Lloyds Banking Group, HSBC and Barclays, is a key plank of the government’s policy of injecting competition into the sector and cut the cost of banking. In the last week of its existence before it is broken up, the FSA is expected to say that new banks will need half as much capital as existing ones while they are setting up.

Last week Martin Wheatley, the head of the new Financial Conduct Authority (FCA), which formally takes over part of the FSA’s work next week, said that bank customers put up with worse treatment than in other industries, but that people are more likely to divorce than move their accounts. The FCA is being given a new mandate to oversee competition and is in the process of recruiting a new director to take control of this crucial part of its new remit.

Existing banks, however, are more focused on the assessments that have been made of their capital positions. The concerns are focused on three main areas: the way that banks are offering leniency to customers in arrears (forbearance); the impact of more regulatory fines and compensation from mis-selling scandals; and the way international capital rules allow them to set aside asset capital against the risk of the loans they hold.

The Bank of England has put an estimate on the three areas of up to £15bn, £10bn and £35bn respectively – a total of £60bn – although at the lowest end the estimate is closer to £25bn.

A survey by accountancy firm KMPG has underlined the impact on bank profitability last year of regulatory scandals – including the fixing of the Libor interest rate and the mis-selling of payment protection insurance. According to the report, combined pre-tax statutory profits at the big four and Standard Chartered slumped 40% on the previous year to £11.7bn.

The government has made clear that it will not put any more money into the banking sector on top of the £65bn pumped in to RBS and Lloyds. Tensions have also emerged, however, about the structure of RBS after the outgoing governor of the Bank of England, Sir Mervyn King, suggested it be broken up into a good and bad bank. Banks can fill any shortfalls not just by raising capital but by cutting risks and selling off businesses.

The FPC is key part of the new regulatory regime which begins next week. It has been set up to look for pressures in the financial system while the Prudential Regulation Authority is being set up by the Bank of England to take on banking regulation previously conducted by the FSA.

RBS boss due to collect bonus worth £700,000

Category : Business

Stephen Hester entitled to almost 230,000 shares awarded to him in 2010 as banking group is hit by further IT problems

The Royal Bank of Scotland chief, Stephen Hester, is due to be handed a bonus worth £700,000 as the bailed-out bank grapples with a new outbreak of computer problems that have left customers demanding compensation.

Almost 230,000 shares were scheduled to be released to Hester on Thursday as the final payment of the only bonus he has been awarded since taking the helm of the bank in 2008. The bonus was awarded to him in 2010 and, according to the bank’s annual report, the shares vest in two equal amounts on 7 March 2012 and 7 March 2013.

The day of the vesting of the bonus coincided with a “hardware fault” that left NatWest customers unable to access their accounts between 9pm and 11pm on Wednesday evening – something that prompted threats by customers to leave the bank, after the second computer glitch in nine months.

The bank’s IT meltdown last June forced Hester to waive his bonus for 2012, even before the Libor-rigging fine, which would have put him under pressure not take any payment.

The bank insisted that the latest problem – which prompted fury on social networking sites such as Twitter – was not related to those in the summer. “Any customer who was left out of pocket due to this outage should get in touch so we can put things right for them,” the bank said as it apologised for the disruption.

Among those customers to express frustration was Andrew Bissett, who tweeted: “Disgraceful service. Am moving my banking to Santander! You cannot be trusted with our money!!!”

Sir Philip Hampton, the RBS chairman, was asked about the bonus now being paid to Hester on the day the £390m fine for rigging Libor was announced last month, and he made clear then that it would be awarded to the chief executive.

The precise value of the 2010 bonus is linked to the RBS share price, which closed at 305p on Thursday. Hester was originally awarded more than 4.5m shares but as a result of a recapitalisation last year this has been adjusted to mean the portion he is due to receive is about 230,000.

Hester, who has overseen a plan which has led to more than £900bn of assets being sold or run off in an effort to reduce the risks the bank is running since he took over from Fred Goodwin, also needs to sell 316 branches under the terms set out by European state aid rules. One approach for them is being put together by a number of big City investors, backed by some private equity firms, who are backing a vehicle that would be chaired by former Tesco executive Andy Higginson.

Hester’s latest bonus is also paying out as senior members of his management team are due to share in bonus windfalls of as much as £6m in May, from awards made to them three years ago. Hester, though, will miss out on £3m that he stood to receive from his share award, as the bank has failed to achieve the performance criteria attached to the bonus.

His total pay package for 2012 has not yet been revealed and will be published in the bank’s annual report later this month.

Last week RBS said that the restructuring plan Hester put in place had achieved enough to make a possible part privatisation achievable before the May 2015 general election. But Sir Mervyn King, the Bank of England governor, claimed on Monday that “nothing had been achieved” and that RBS should be split into a “bad bank” to hold the troublesome loans and a “good bank” that could start lending more.

Kipper Williams on NatWest

Category : Business

Those IT gremlins are proving hard to shake off…

Continue reading here: Kipper Williams on NatWest

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Lloyds and RBS: too big to fail – and too big to manage

Category : Business

At the heart of the argument over the results of the partially state-owned banks is sovereignty of the people

Hearing the CEOs of Britain’s “too big to fail” banks talk up their annual results in the past few days, it was difficult not to feel a mixture of pity, respect and fear. In particular, the heads of the partly state-owned Lloyds and RBS face demands that are logically impossible to meet, and to see them trying to be everything to everyone almost produces compassion. Their struggles also elicit respect, because they still manage to put on a pretty good show. But then you realise what they can’t tell us, and how their bank’s failure will be the financial equivalent of a nuclear meltdown, and you shudder.

Announcements of annual results – Lloyds and RBS last week, HSBC on Monday – come with conference calls for financial journalists in the morning and, sometimes, press conferences for lunch. It was interesting to note that the two banks dependent on the government made their top people available for informal chats in the margins of a press conference, while HSBC, which isn’t, made do with a conference call at which almost half the time was taken up by the heads reading out a prepared text.

The Lloyds and RBS press conferences were strikingly similar and, as they wore on it became hard not to think of them as dull, rather sophisticated but above all extremely effective rituals. On one side of the table were men (Lloyds had one woman, who said nothing) in suits projecting an image of control. Yes, they were presiding over banks with tens of thousands of employees engaged in very different and often wildly complex activities across the globe. Yes, they had been caught out by scandal after scandal somewhere in their vast empires and yes, in the past their books had given a wildly inaccurate picture of the risks they were running.

But all of this was now in the past and firmly under control, they implied, as they fired off endless numbers and percentages and ratios, and said things like “We remain very confident of our capital position,” or “Our strategy remains centred on taking into account the interests of all of our stakeholders”, or some other cardboard PR phrase CEOs learn to use when they want to deflect a question they know can’t be followed up.

Their vocabulary had been sanitised to a startling degree, with PPI and other schemes that cheated tens of thousands of trusting Britons out of their money becoming “legacy issues” requiring “customer redress”. (HSBC referred to its huge fines in the US for massive drug money-laundering as “regulatory and law enforcement matters”.)

This was one side of the table, and on the other side were the financial journalists, most of them looking distinctly less well dressed. What to ask when you’ve only just been given a telephone book of numbers and tables? Excluding three appendices, the RBS annual results came to 289 pages. HSBC produced 550 pages and Lloyds 165. Finding the hidden risks therein wasn’t a puzzle in which you look for an answer to a question. These annual reports, and the huge organisations they purport to cover, constitute a mystery, ie a situation where the question itself is unknown.

“What was that £250m for?” asked one journalist. How was the CEO’s pay structured? What did Lloyds think of the EU cap on bonuses? The CEOs would address most reporters by their first names, then give a meaningless answer. About a third of the questions focused on the terms and timetable of Lloyds’ and RBS’s return into private hands; will the taxpayers get their money back?

This was where it quickly became clear that Lloyds and RBS are asked to do the impossible. The holes in their books are caused mostly by toxic loans, but they are told to increase lending, that is to lend to parties they would otherwise prefer not to lend to. At the same time, they must increase their capital buffers, so hold on to the same capital they are told to lend. RBS and Lloyds must increase profits, but are crucified when they pay bonuses to the very bankers who bring in those profits. The banks must also be ethical, so stop the profitable practice of ripping off their clients. Also, Lloyds and RBS must focus on the UK, even though it is almost impossible for a bank to make profits in an economy that is flatlining (HSBC lost money in its UK and US operations, and was saved by its activities in emerging markets). To boot, the UK government intends to increase competition between banks on the high street – a move that ought to decrease margins.

In short, Lloyds and RBS are told to increase profits so they can be privatised as soon as possible, while at the same time being told to stop doing many of the things that traditionally brought in these very profits.

It almost felt as if the RBS and Lloyds CEOs’ job was to maintain the illusion that this could be done, while providing a lightning rod to all those who don’t want to look beyond bonuses and the question of whether the taxpayers get their money back.

What if bonuses and privatisation are diversions and the real issue is “too big to fail” in combination with too big to manage? If you believe that CEOs knew nothing about the scandals taking place under their watch, what reason is there to believe that this time they are on top of things?

Over the past 18 months I have interviewed more than 150 people working in finance in London, most of them in junior functions. Many of them believe that the top of their organisation has no idea what’s really going on. They are equally scathing about the regulators.

This is the debate Britain refuses to have. The timing and conditions of the privatisation of Lloyds and RBS are vital to the British government’s financial health, and it makes for powerful and simple-to-produce stories, especially if these banks continue to pay high salaries and bonuses. But Lloyds’ and RBS’s return to private ownership is ultimately a question of secondary importance when both banks continue to be too big to fail – and so effectively remain a public liability.

While this idea persists, Britain remains hostage to the health of banks over which it has only very limited influence. Knowing that your vital interests are affected by factors beyond your control is a recipe for stress. It’s not what democracies should be about. But it has become the new normal. The big issue today is not whether British taxpayers get their money back. It’s whether British citizens get their sovereignty back.

RBS boss admits ‘chastening’ year as losses breach £5bn

Category : Business

• Stephen Hester says the privatisation is getting closer
• £607m paid out in bonuses, £215m to investment bankers
• £450m extra charge from PPI scandal
• Plans to spin off part of US arm Citizens

Royal Bank of Scotland declared on Thursday it was on track for a partial privatisation next year but sparked a fresh row over bonuses at the scandal-hit institution.

The bank posted an annual loss of more than £5bn and Stephen Hester, its chief executive, admitted 2012 had been a “chastening” year after its £390m Libor rigging fine. Its total losses since the 2008 bailout have now topped £34bn. However, the bank is still paying out £607m in bonuses in the coming weeks.

The shares were among the biggest fallers on the stock market, losing more than 6% to 323p – which amounts to a near £15bn loss on the taxpayer’s 82% stake.

Hester, however, said “the light at the end of the tunnel” toward privatisation was “coming much closer” while Sir Philip Hampton, RBS’s chairman, hoped the bank would start to pay a “token” dividendto shareholders – the first since the banking crisis – “as soon as possible”. He said: “Our objective is to give the government options to sell its stake as soon as possible and it would be very good if we could make that ‘as soon as possible’ 2014.”

A government spokesman insisted that “there is no timetable for a disposal” although ideas for a free distribution of shares to 46m voters had been floated as recently as a fortnight ago.

George Osborne claimed credit for the decision by RBS to “accelerate” its focus on UK retail and corporate banking. It announced further streamlining of the investment bank and a plan to spin off part of its US operation, known as Citizens, in two years. Hester described UK Financial Investments, which looks after the stakes in the bailed-out banks, as becoming “more activist in trying to present its views”.

Asked what form any share sale would take, Hampton said he expected taxpayers to be able to “participate in the availability of shares” although he warned about the number of football stadiums that would be needed for shareholder meetings.

Hester said the privatisation of RBS would be a “seminal” moment, appearing to indicate that he intended to stay on to see the task through.

Despite the loss, RBS has paid out £607m in bonuses, £215m of which went to its investment bankers whose division was behind the Libor scandal. The bank, which said bonuses would have been £500m higher without the Libor fine, risked inflaming the row over City pay further by indicating that its annual report in March could disclose how many of its staff take home more than £1m.

Labour Treasury spokesman Chris Leslie said: “We need radical change in the culture of our banks and that must include reining in bloated bonuses, which are a device for keeping traders focused on the weeks ahead, rather than years ahead.”

Ian Gordon, analyst at Investec, said that RBS was “starting 2013 in a weaker financial position than the market had anticipated”. The bank insisted it would meet international targets for capital before the deadline in 2019.

Hester stressed that the bank’s assets had been reduced by £906bn since their peak in 2008 but acknowledged the cost of the payment protection insurance scandal, for which the bank took a further £450m charge to take the total cost to £2.2bn, and the interest rate swap mis-selling scandal had required a further £650m charge. The computer meltdown in June cost £175m.

He said: “2012 saw landmark achievements for RBS. It was also a chastening year. Along with the rest of the banking industry we faced significant reputational challenges as we worked with regulators to put right past mistakes.”

Osborne, who this week rejected calls for RBS to be fully nationalised, said: “I have been very clear that I want to see RBS as a British-based bank, focused on serving British businesses and consumers, with a smaller international investment bank to support that activity rather than to rival it.”

The chancellor added: “The government’s strategy is for RBS be a stronger and safer bank, which in time can be returned to full private ownership.” But he did not give any clues as to his preferred route for when a share sell-off can begin.

Hester acknowledged the influence of the government and also the regulators which have been conducting a review of bank capital. There had been an “important accommodation” over the bank’s capital, Hester said.

“The two revisions to our strategy that go with that are a further shrinkage of our markets business, with the capital there coming down significantly further over the next couple of years” and the intention to start selling Citizens.

On bonuses, Hester said that while the figure looked a “big number”, it was below the £1.8bn being paid out at Barclays and sums handed out by rivals UBS and Deutsche Bank.

RBS was forced to sell off its insurance business Direct Line by Brussels in return for the taxpayer bailout in 2008 and spun off a third of the operation last year, for which it has already been forced to take a goodwill writedown of £394m.

• This story was amended on Thursday 28 February to correct the figures for the amount being paid in bonuses

RBS chief underpaid, says chairman

Category : Business

Stephen Hester’s £6m bonuses, on top of £1.1m salary, not all paid as MPs told of ‘reprehensible’ failings over Libor scandal

The chairman of the Royal Bank of Scotland on Monday described the pay of the bailed out bank’s chief executive Stephen Hester as “modest”, amid fresh scrutiny of bonuses in the wake of the £390m Libor fine.

Sir Philip Hampton said Hester – who can get up to £6m a year from bonuses on top of his £1.1m salary – was paid “well below the market rate of people working in banking” because his bonuses had not paid out in full. He was speaking during a lengthy session of the banking standards commission in Westminster, in which a senior RBS colleague admitted the bank had believed Libor rigging was “a mathematical impossibility”.

The evidence was called after RBS was fined £390m last week for rigging Libor, the interbank lending rate, and announced the departure of the head of its investment bank, John Hourican. Hourican told the commission that he was leaving in order to shoulder “ultimate responsibility” for the manipulation of the benchmark rate.

Hourican explained the bank had not been focused on Libor in 2008, at the height of the credit crunch, because “when we took control of the bank it had had a cardiac arrest”.

He added: “We had to prioritise dealing with the existential threat to the bank.” He urged those who are staying to change the culture, saying: “I have told people who are prepared to listen that they shouldn’t waste my death.”

Hampton, defending bonuses for Hester, conceded the chief executive had a “highly paid job” but that “his pay has been modest relatively”. He had received just one bonus since joining in 2008, of £2m, which has yet to be paid out. Some £780,000 of that will pay out in shares next month. Hester defended his pay, saying the nation was now “off the hook” for a lot of “bad things” of the past.

“My bonus should be assessed on all the things I do well and badly and judgment should be reached in the round,” said Hester. Hampton described Hester as having one of the most difficult and demanding jobs in banking. “He has also in his four years been paid well below the market rate for a job in world banking,” said Hampton.

Evidence was also taken from Johnny Cameron, the former head of RBS’s investment bank, who left after the bailout and has agreed with the Financial Services Authority not to hold a senior banking job again.

Andrew Tyrie, the conservative MP who chairs the commission, described Hourican “as a human shield” for others including his deputy, Peter Nielsen. Hourican said the bank was better served by Hester and Nielsen remaining in their roles.

Nielsen admitted that there were problems with the Japanese yen and Swiss franc Libor rates but that leading currencies such as sterling were not affected. “Senior management felt it was almost a mathematical impossibility” to affect Libor, Nielsen said.

He conceded that the bank had been too slow to respond to concerns about Libor and said the first two years after the bailout had been spent trying to save the bank. The Libor rigging took place between June 2006 and March 2010. Hourican admitted that it was “reprehensible” that Libor rigging had continued after the £45bn taxpayer bailout.

Tyrie expressed doubt about the bank’s claim that it would recoup £300m of the fine from bonuses.

“We were not given sufficient confidence today that the arrangement for funding the fines from bonuses will do what it says on the tin,” said Tyrie. The commission’s chair wants RBS to show what bonuses would have been paid without the fine.

Libor rigging: timeline

Category : Business

How the benchmark rate fixing unfolded

The Libor interest-rate scandal dates back to 2005. Little known outside the City, it underpinned trillions of pounds worth of loans, mortgages and financial contracts in Europe and the US.

Regulators have already imposed £1.7bn of fines on a string of the world’s biggest banks, while police are pursuing criminal investigations into staff involved in rigging the rates to suit their employers.


Between January 2005 and June 2009, Barclays derivatives traders made a total of 257 requests to fix Libor and Euribor rates. Initially, traders sought to inflate the bank lending rate to boost profits – and their own bonuses.


After Northern Rock collapses, Barclays submits artificially low rates to give a healthier picture of its ability to raise funds.

In a phone call in December, a Barclays employee tells the New York Fed that the Libor rate was being fixed at a level that was unrealistically low.


In April the New York Fed queries a Barclays employee over Libor reporting.

The Wall Street Journal publishes the first article questioning the integrity of Libor.

Following the WSJ report, Barclays is contacted by the British Bankers’ Association over concerns about the accuracy of its Libor submissions.

Later in the year, the Fed meets to begin inquiry. Fed boss Tim Geithner gives Bank of England governor Sir Mervyn King a note listing proposals to tackle Libor problems.


A year on, the BBA issues guidelines for setting Libor rates.


In June, Barclays makes first effort to clamp down on Libor manipulation in email setting out standards of behaviour.


Royal Bank of Scotland sacks four people for their alleged roles in the emerging Libor-fixing scandal.


22 June Barclays chief executive Bob Diamond learns of emails sent by dodgy traders. He later says reading them made him feel “physically ill”.

27 June Barclays admits misconduct. Regulators fine it £360m.

29 June Diamond insists he will not resign.

July Barclays chairman Marcus Agius and Diamond resign, followed by chief operating officer Jerry del Missier.

The prime minister, David Cameron, announces a review of the banking sector, sets up Banking Commission. Serious Fraud Office (SFO) launches a criminal inquiry into Libor manipulation.

Deutsche Bank confirms that a “limited number” of staff were involved in the Libor rate-rigging scandal. It clears senior management. SFO arrests three men in connection with investigations into Libor.

Swiss bank UBS is fined £940m by US, UK and Swiss regulators.


January Barclays’ new boss, Antony Jenkins, tells staff to sign up to a new code of conduct – or leave the firm – in clean-up operation.

February RBS is fined £390m by

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Peter Meinertzhagen

Category : Business

One of the most successful and influential stockbrokers in the City of London

Peter Meinertzhagen, one of the City of London’s most successful and revered stockbrokers, who has died suddenly aged 66, liked to pick winners. Stocks and shares, horses, ideas, people, clients – what mattered to him was pitting his wits and coming out on top.

He started his career in the lowly position of postroom clerk in a stockbroking firm in the City, but it was clear from the outset that he would soon rise to greater heights. One reason was his impeccable City pedigree. His father, Daniel, was chairman of the blue-blooded Lazard Bros merchant bank. His uncle Luke was senior partner of Cazenove, the City’s most elite and powerful stockbroking business. Further back, the Meinertzhagens had been merchants in Germany before buying a City merchant bank, Frederick Huth & Co, and moving to London in the 1800s. Peter, born in London, was sent first to Eton and then to the Sorbonne in Paris – hardly the usual background for a post room clerk.

But it was not simply his connections that set Meinertzhagen on the path that made him one of the most influential corporate advisers in London, it was also his intelligence and his personality. Meinertzhagen had the gift of making others feel valued – and also feel that he could, above all, be trusted. For him, a successful outcome for his clients, which included many of Britain’s top 100 companies, was always more important than securing additional fees for his firm.

He could appear opinionated, compelled to give his honest view even if it went against the grain and was unpopular. But his view was inevitably delivered with charm and a twinkle in the eye. He was not afraid to say “no” when a client proposed a course of action or a deal that he considered against their own interests. His warmth and enthusiasm gave him significant powers of persuasion.

At the daily “morning prayers”, meetings of clients with advisers when a deal was in progress, his enjoyment of the thrill of the chase could be infectious. His love of competition was equally evident when wooing potential new clients. He would wine them and dine them, take them shooting or to the races. Derby Day was an inviolate fixture in his calendar.

When he joined Hoare & Co in 1965, the City still operated on the basis that one’s word was one’s bond and deals sealed with a handshake were as solid as any written contract. This was a tradition with which he felt comfortable and one which, against the tide of changes brought to financial markets by the “big bang” of financial deregulation in 1986, he strove to maintain throughout his career. He regarded the changes as a necessary evil.

It is symptomatic of Meinertzhagen that he remained loyal to the firm that first employed him, and of which he became a partner in 1973. Over the years, the business went through a series of metamorphoses, first by merging with Govett, then by selling a stake to the California bank Security Pacific. Ownership later passed to the Dutch bank ABN Amro, itself taken over by Royal Bank of Scotland, after which Hoare Govett was sold to Jefferies & Co.

Twice he had to step in to stave off crises. The first time was in 1990, when long-time chairman Richard Westmacott suddenly quit. Meinertzhagen assumed the leadership role and remained chairman until 2004 when, after a serious illness, he eased back from the firm, remaining on the board. But the following year, he was playing golf when his mobile rang. His chosen successor, Nigel Mills, had been poached by Citigroup, the US investment bank. Worse, he was taking a team of other Hoare Govett executives with him, and more defections were rumoured. Meinertzhagen returned full-time as chairman and once more stablised the firm before retiring in 2007.

He never spiritually left the City, however, and in 2009 accepted the post as adviser to Oriel Securities, a partnership based on the more traditional values of impartial advice and integrity. It was an environment in which he felt comfortable and, two years ago, he joined the board as a non-executive director, but nevertheless became closely involved in the business, getting to know the staff and assisting the growth of Oriel’s client base. He was first on the dance floor at the office party, encouraging younger colleagues to join in.

A fully metropolitan man, Meinertzhagen lived in Chelsea and was to be seen at most of the glamorous events in town. He was equally at home, however, in the country, where he loved to shoot. He married Nikki Phillips in 1967. She survives him, along with four of their five daughters.

• Peter Richard Meinertzhagen, stockbroker, born 16 April 1946; died 28 November 2012