Mark Kleinman: Natwest chair’s in-tray, Skarbek’s return and the Tata Steel saga
Mark Kleinman is Sky News’ City Editor and is the man that gets the City talking in his weekly Morning Wire column.
Natwest’s new chair can bank on a turbulent ride
It’s appropriate that Rick Haythornthwaite’s most recent assignment was completing a review of armed forces incentivisation for the Ministry of Defence.
His next – chairing Natwest Group, as I revealed on Sky News yesterday – might also feel like National Service.
Certainly, his two immediate predecessors at the bank, Sir Philip Hampton and Sir Howard Davies, who will step down next April, were under siege for much of their tenure.
The taxpayer-backed bank, still haunted by Fred Goodwin’s legacy, has again been left reeling in recent weeks by Nigel Farage after the unedifying row over the closure of his Coutts accounts.
Haythornthwaite’s appointment restores a sense of order. Whether he has agreed to surrender quite enough of his other directorships is debateable (he will step down as chair of the privately owned AA but remain on the board, remain as chair of Ocado but give up seats at Globant and several other companies), but in difficult circumstances Natwest’s board has arrived at a sensible destination.
By accepting the job now, Haythornthwaite has put himself in prime position to become the chairman who oversaw Natwest’s return to full private ownership.
Suggestions yesterday in some mquarters that his background as an industrialist would somehow hamper him are nonsense.
He spent nearly 15 years at Mastercard International, one of the world’s biggest payments companies, and his diverse portfolio of non-executive roles over recent decades have given him an important perspective on the real economy that banks such as Natwest serve.
It won’t be an easy job, however. Haythornthwaite’s most important tasks will be to appoint Dame Alison Rose’s permanent successor as chief executive, and to strengthen a board which, not unreasonably, has been bereft of genuine heavyweights since Royal Bank of Scotland’s bailout.
He may also have an incandescent Farage to contend with at times. That MoD review may well come in handy for unexpected reasons – not least preferential access to a surplus Army flak jacket.
Skarbek on his way back as banker heads for Europa Partners
Few London M&A bankers boast a more prolific track record than Jan Skarbek, Citi’s head of UK investment banking until a year ago.
Skarbek resigned after an internal investigation over allegations that he had made an inappropriate remark to a female colleague while on an overseas work trip, thereby bringing an abrupt halt to his 28-year career with the US bank.
Now, Skarbek is planning a comeback: I can reveal that he has joined Europa Partners, a London-based advisory boutique as a partner.
Europa, founded in 2000 by former SBC Warburg banker Paul Zisman, has advised on a string of media and technology deals, including the sale of London-listed Haynes Publishing Group and New Scientist.
Skarbek becomes the firm’s fourth partner, and brings an extensive deal pedigree.
According to one long-standing client of Skarbek told of the banker’s move, his appointment will be a big asset to Europa.
He worked with Pearson on its successful defence against Apollo Global Management, for Parker Hannifin on the takeover of , and with Clayton Dubilier & Rice on the £2.6bn take-private of UDG Healthcare that completed last year.
His arrival at Europa underlines the trend of bulge-bracket bankers departing for boutique firms since the financial crash of 2008.
According to one long-standing client of Skarbek told of the banker’s move, his appointment will be a big asset to Europa.
Going green at Port Talbot will come with a cost
Steel yourselves – you’ve heard this one before: the government is in advanced talks with Tata Steel about a state bailout to preserve the future of steelmaking at Port Talbot.
The familiarity of that statement is hardly surprising: successive prime ministers, chancellors and business secretaries have wrestled with the conundrum of how to preserve an emblem of Britain’s remaining manufacturing capability. So far, none has managed to persuade its Indian parent that the economics are worthwhile.
That looks like it’s about to change. As I reported at the weekend, a £500m publicly funded grant to Tata Steel is now, apparently, imminent. I understand an announcement has been pencilled in for next week, although it is of course subject to change.
Crucially, though, it looks to have removed a pivotal element of the proposal earlier this year that Whitehall officials insisted on when they were discussing £300m packages for Tata Steel and British Steel, its smaller competitor.
Indeed, ministers have already acknowledged that substantial job losses are inevitable if it hands over £500m (or conceivably more) to enable Tata Steel to replace Port Talbot’s blast furnaces with greener electric arc furnaces. Insiders say the latest discussions envisage as many as 3,000 of the company’s 8,000-strong workforce being lost during and after that transition.
It’s perfectly legitimate to argue that a stream of redundancies over time is preferable to the closure of the country’s biggest steelworks and thousands of additional cuts immediately, as Tata has threatened on several occasions.
Nevertheless, ministers’ perception that they have been held hostage less than 18 months before a general election in which their economic credibility will be tested as never before does not override the need for rational decision-making.
If the government is to sign a formal agreement with Tata Steel, it should be on the basis that no additional cuts must take place in the next decade. If they do, the money should be repaid, in full, with interest.
The structuring of an agreement in a similar way to the post-offer undertakings which now govern public company takeovers would provide some comfort that Whitehall takes the giveaway of substantial amounts of public money with the appropriate degree of seriousness.