Thursday, February 11, 2010

When the Sants goes marching out.

12 years ago Hector Sants was my boss. Strictly speaking, my direct boss was his deputy, but across the football field size of the UBS equity trading floor at 100 Liverpool St. everyone knew that this tall, solid figure was the Boss. He was not -in the manner of many City Bosses- a flamboyant, loud or bullying figure. He was measured, he was intensely intelligent, he was very, very competent. In short he still stands out today as someone who understood the business of the City with forensic clarity. His slow voice, with just a trace of the West of England in it, was not the loudest in any discussions-but once he had listened, and made his judgement, his decision was usually right and was always respected. He understood complexity and was impatient with the glib statement or facile judgement. He would quickly identify mistakes and even more quickly move to correct them. The shot gun marriage of UBS to SBC in 1998 was the result of terrible misjudgements in Zurich and not in London.

In the end, his obvious competence was why he was tapped to take on the role of head of the FSA- the Financial Services Authority- the City regulator. Unlike many who take on such roles he neither needed the prestige nor the money. He does, however, have a strong moral sense of doing the right thing and he is also, in his quiet and understated way, quite patriotic. He chose to give something back.

He has, as head of the FSA, faced a financial crisis on a scale unseen for over three generations. He is generally agreed to have acquitted himself well- his competence and determination contrasting with many others in public and financial life. In the end, as he had said he would, he has chosen to leave the FSA after three years.

The question is why Hector could not be persuaded to stay. I think there is no doubt that the decision of the Conservatives to abolish the FSA and unify the financial regulatory system under the Bank of England is the root cause. There are- to be frank- many pros and cons about this, and it is certainly quite arguable as to whether it is a good or a bad move. However I think what concerns the City is that the decision seems to have been taken by George Osborne without having a debate and fully understanding the price of creating several years of regulatory upheaval right at the time when the entire system is badly in need of consistency and stability. In short it is at least as much the way that the -apparently irrevocable- decision has been made, without due consideration, as the decision itself, that worries City practitioners.

Even though the financial system has undergone massive upheaval, it is not true to say that all bankers are incompetent charlatans- and when it is politicians who are ladling out such abuse, it is probably fair to say that the political class has much to hide and should probably take its full share of the blame. Either way, unquestionably respected figures like Hector Sants should not be ignored and then shrilly derided by a young and inexperienced politician on the make.

Many commentators are suggesting that Hector's departure looks bad for the Conservatives.

It not only looks bad. It is bad.

It is a further misstep from the accident-prone shadow chancellor. Mr. Osborne is not exactly respected in the City as it stands. Another clanger like this and very serious questions will be raised about Mr. Osborne's temperament, his judgement, and indeed his competence.

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