ALEX BRUMMER: Bank of England in murky waters over its failure to act earlier on intelligence about Greensill
Andrew Bailey has the rare skill of turning the specific into the general.
At a Commons session on the meltdown of Neil Woodford’s investment empire, the then chief executive of the Financial Conduct Authority (FCA) argued that the rules-based approach mandated by Brussels made it easier for miscreants to game the system.
When the Treasury Select Committee excavated the London Capital & Finance collapse, Bailey embarked on a treatise about how difficult it was to enforce beyond the perimeter of the FCA’s responsibilities.
Bank of England governor Andrew Bailey (pictured) has the rare skill of turning the specific into the general
At first glance the Governor of the Bank of England’s speech this week, entitled Meeting Varied People, was all about diversity.
Bailey took matters a step further, pointing out that were it not for the Old Lady’s willingness to seek counsel from a wide range of sources, the Covid Corporate Funding Facility could not have been rolled out so rapidly.
He rallied to the defence of successive governments by suggesting that the antidote to the problem of lobbying would be to ‘speak to no one’.
He argued that this would not make for good decision-making and the Bank had to be rigorous about speaking to a wide range of people.
We now know he was getting his defence in early following the disclosure that former prime minister David Cameron contacted the Bank several times last year in the hope of getting favourable treatment for Greensill Capital.
Bailey would not be the first governor to have had dealings with rogue financiers. Among others, his predecessors met the late Robert Maxwell, and in an extraordinary episode in the 1970s installed James Goldsmith as chairman of the dodgy financial firm Slater-Walker.
Given Cameron’s request, it is hard to believe that the Bank didn’t at the very least do some speedy due diligence on Greensill.
It already had knowledge of its biggest client, metals tycoon Sanjeev Gupta, as it is currently winding up his Wyelands Bank.
How the Gupta-owned industrial group managed to get a banking licence in the first place is a bit of mystery.
Greensill’s supply chain finance operation, because it was technically operating in the wholesale markets, fell outside the FCA’s and the Bank’s direct purview.
Given the close relationship with Credit Suisse, which was packaging up Greensill credits and passing them on, someone at the Bank should – at the very least – have been monitoring its operations.
The cost to Credit Suisse of involvement has been severe, with high level departures. It is now involved in a £1.5billion fundraising as it seeks to restore its capital after the meltdown at unrelated hedge fund Archegos came fast on the heels of Greensill’s insolvency.
Bailey did a sterling job in protecting the financial system from disruption at the start of the pandemic a year ago and easing the scarring of businesses.
But the Bank learned in the past how costly the failures of Johnson Matthey Bank, BCCI and Northern Rock were to the Old Lady of Threadneedle Street in terms of reputational damage.
As the investigatory noose tightens around the Greensill-Gupta nexus, the Bank could find itself under scrutiny for failure to act earlier on intelligence about Greensill.
The feebleness of resistance by directors and shareholders to private equity bids for FTSE companies is legion. So fund manager Liontrust deserves plaudits for its refusal to buckle to the £2.3billionn offer for Aggreko.
A combination of undervalued indices post-Brexit, tricky Covid trading and a relatively weak pound has made Britain a happy hunting ground for slash and burn, get-rich-quick ownership.
Liontrust opposition is not based on ethereal grounds but hard numbers, which showed that at the offer price of 880p per share, the rates of return for the buyer would be in double digits at a time when interest rates are negligible. That cannot be right.
What a pity that investors in William Hill, G4S et al have taken the money and surrendered so easily.
Those of us who feel queasy about the increasing popularity of unregulated crypto-currencies and hyped valuations for trading platforms will be watching events in Turkey with interest.
The country’s crypto exchange, Thodex, has ceased operations after the CEO went on the run amid allegations that hundreds of millions of dollars of crypto has gone missing.
This rendered the assets of 390,000 active users ‘irretrievable.’ Scary!