Martin Bixel - 27 Mar - 0 Comments
Welcome to the FCA, the prestigious Faculty for Career Advancement.
And here’s the latest graduate: Tracey McDermott. Our Trace has just landed her dream job at Standard Chartered, proof once again of the success of the FCA’s most bankable training course: cashing in on regulation.
Yes, maybe nobody cares that Ms McDermott was regulating her new employer only seven months ago in her role as stand-in boss of the Financial Conduct Authority. But it all looks far too cosy — just as it did when Sir Hector Sants, chief of the regulator’s discredited predecessor the Financial Services Authority, took his joke regulatory skills to Barclays. Since joining the FSA in 2001, Ms McDermott’s also headed enforcement and supervision. That included scrutinising the Standard shenanigans that so infuriated America, not least sanctions-busting capers with Iran, malarkey that landed the bank with a $300 million fine and a US-appointed monitor.
Indeed, Ms McDermott, who earned £570,000 last year, might still be at the FCA if she hadn’t heard George Osborne on the radio this time last year telling the world that “she doesn’t want the job”, a remark that seemed to come as news to her, even if she denied that. Weeks later, Andrew Bailey had been named FCA boss and Ms McDermott was heading for a June 30 exit. And now she’s ready to coin it as Standard’s “group head, corporate, public and regulatory affairs”, reporting to chief executive Bill Winters. She’s even in charge of the bank’s PR.
True, it would be worse if she’d joined Lloyds Bank, a UK-focused lender rather than an emerging markets one. But the conflicts are so obvious that Mr Bailey had to write to Mr Winters, explaining what Ms McDermott can and cannot do. It’s all terribly vague. Yes, she’ll recuse herself from decisions at Standard “relating to matters in which she had some involvement at the FCA”. But how do you enforce the bigger worry outlined by Mr Bailey: that the stuff she learnt at the FCA “might benefit Standard Chartered relative to other banks”? What’s she meant to do: blank her mind to all she ever knew, so undermining the reason Standard hired her?
Ms McDermott no doubt will behave with integrity. But it would be far better if FCA managers were barred from taking a job at a regulated firm for at least two years. Ms McDermott is a qualified solicitor, so had plenty of other options. Her move undermines the FCA. How can we trust its regulation if there’s a suspicion its top bods might go soft on the banks to preserve future job offers? No wonder Ms McDermott ditched that politically awkward banking review.
Phone a friend
Who says mobile phone charges are pricey? Not in India. There you can call, text and surf pretty much for nothing, all thanks to Mukesh Ambani, the country’s richest man. He had the bright idea of setting up his own mobile phone company, the sort of thing you can only do if you have the odd rupee to spare, what with the launch of Reliance Jio costing a mere $25 billion. To attract punters, he offered free voice and data services for six months. The upshot? About 72 million Indians already signed up since September to his mammoth corporate gamble.
And what’s not to like about that? Nothing, unless you happen to be Vittorio Colao, the Vodafone boss. He’s No 2 two in the Indian market, now home of such a fun price war that he was forced to write down the business by $5 billion at November’s half-year results, the latest setback to go with all those rucks with the local tax authorities.
So it’s nice to see Mr Colao doing something about it. He’s in talks over merging Vodafone’s Indian arm with the No3 player, the Idea Cellular business owned by the Aditya Birla Group. Put them together and they’ll have 380 million subscribers and 43 per cent of revenues, leapfrogging market leader Bharti Airtel, with 260 million customers and around a third of sales. Better, Mr Colao would have $9 billion of synergies to shoot for and a route to “deconsolidate” his troublesome Indian wing from the group accounts. Vodafone shares rose 1 per cent to 196p. Pull the deal off and they’ll ring up something bigger.
Trouble in store
Luckily, it’s only regulators who are prone to “postcode analysis constipation”. That’s the phrase Shore Capital analysts have coined for what awaits the wonks at the Competition and Markets Authority, soon to be chewing over the Tesco/Booker deal.
Shore reckons the CMA will be “totally swamped” by the exciting permutations thrown up by the two groups’ store portfolios. Tesco has 2,839 Express, Metro and One-Stop convenience outlets, plus 730 Extra and superstores. Meantime, Booker has 3,358 Premier shops, 1,903 under the Londis fascia, 150 Budgens and 52 Family Shopper stores. On what basis will the CMA even look at the myriad overlaps? Or will it just be more interested in total market share: 28 per cent for Tesco and 3 per cent for Booker, excluding food service. The whole thing will get deliciously messy. One reason, perhaps, that Tesco shares fell more than 4 per cent yesterday to 197¾p.
Spot the deliberate mistake. Log on to the company’s website and there it is: “Get the skinny on all things Fitbit.” What idiot put in the “the”? Take it out and it all makes perfect sense, as the shareholders have just found out — again. The latest profits warning from the wearable fitness tech outfit has left investors two thirds skinnier in a year. Some 110 jobs are now for the chop. The website proof reader must have gone already.