Anthony Hilton: ”If I were looking for a reason why Sants is doing a runner, MF Global is where I would look”
“In the days after MF Global collapsed, the word in London was that the Financial Services Authority had acquitted itself rather well. It had become aware of the problems in the American parent, and demanded much tighter safeguards in the UK to protect British clients. It moved early to avoid a repeat of the Lehman fiasco, where New York sucked billions out of London over its last fateful weekend. The implication was that whatever might have happened in the US where the bulk of the activities took place, the UK arm should emerge relatively unscathed.
But last week’s liquidator’s statement told a rather different story. It said that so far UK clients have got back only a quarter of their money compared with three quarters in the US and almost all of it in Canada. It may be the disparity is accounted for solely by the different pace of the winding-up process in the various regimes, but that is rather a brave bet. The more likely explanation is that the UK clients stand to take a massive hit despite the regulator’s best efforts to protect them.
The other big news of last week was of course the announcement of the premature departure of Hector Sants as chief executive of the Financial Services Authority — an announcement that was so unexpected Lord Turner, the non-executive chairman of the authority, is going to have to become executive chairman to cover for him.
If I were looking for a reason why Sants is doing a runner, MF Global is where I would look. True, Hector’s new-found toughness has made him unpopular in the City and insufficiently appreciated by politicians. True, there have been tensions between him and his new colleagues who come from the Bank of England. The body language between him and his deputy Andrew Bailey is not great, and last week’s public criticism from Deputy Governor of the Bank of England Paul Tucker of the way in which the Solvency II capital regime for insurance companies was being implemented, may well have reduced him to fury.
But he will also have known that at some point MF Global will break into the public and political consciousness, the Treasury Select Committee will get involved, the witch-hunts will begin and he will be asked why, three years after the collapse of Lehman, something very similar was allowed to happen again.
Faced with a prospect like that, who wouldn’t want to retire?”
Friendly Corporate PSL
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