NatWest’s Sir Howard Davies: ‘I am quite pessimistic. Brexit was a big mistake’ | banking

sir Howard Davies is a concerned man. He is concerned about political polarization. He is concerned about the long-term effects of Brexit on the City of London. And he is concerned about the resistance to globalization.

One thing he’s not really concerned about is the health of the bank he chairs, NatWest, which in its former guise as Royal Bank of Scotland was on the brink of collapse during the global financial crisis of 2008.

Davies has been NatWest’s chairman for seven years and the turning point in the bank’s fate, he says, paid a $4.9 billion (£3.6 billion) fine to US authorities in 2018 for its role in the subprime crime. mortgage crisis. Until then, NatWest had been “clambering behind the bank” to find capital, but now it is in better financial shape than many comparable European banks and has been able to expand. It has been, he says, “a game of two halves”.

The football metaphor is telling because Davies has a different concern. A lifelong fan of Manchester City, he fears his side will be plucked to the Premier League title by Liverpool on Sunday’s final round of play. around the . to decrease


resume

Age 71

Family Married to an expired journalist. Two sons, one on the left, one on the right.

Course Bowker Vale primary; Manchester gymnasium; Memorial University of Newfoundland; Merton College, Oxford; Stanford business school.

Pay “The usual answers are ‘enough’ or ‘no comment’, but £750,000 is published in NatWest’s accounts.”

Last holiday Cycling along part of the Rijnpad. “One day I will complete it.”

Best advice he got “Always show that you can do your boss’s job when you need to.”

Biggest career mistake “I agree to become director of the LSE. It ended in tears.”

Word he uses too much “Guardiola, as in ‘we have Guardiola’, sung to the tune of Glad All Over.”

How he relaxes Playing cricket and listening to pianist Brad Mehldau: “Usually not at the same time.”


potential agony, he has wagered £100 at 8-1 on Liverpool, adding the title and Champions League to the FA and Carabao cups they have already won.

It’s an “emotional hedge,” he admits, as he talks about a half-century career spent at the Foreign Office, the Treasury and the Bank of England, and Great Britain’s foremost financial regulator. Britain, Director General of the CBI. a management consultant and head of UK airport capacity research.

Asked which of his many jobs he has most enjoyed, he chooses none of the above, but adamantly chooses to head the Audit Commission (which was later abolished by David Cameron’s government), which examined whether local authorities are paying offered money.

“It was an exciting job. I found that you could significantly improve the local services where the differences were absolutely huge. It was really interesting and rewarding, and you could really see you were making a difference.”

Far less pleasant was the end of Davies’ tenure as director of the London School of Economics, after concerns were raised over the school’s decision to accept funding from a foundation controlled by Muammar Gaddafi’s son.

Davies says he never asked for money himself and thought something was wrong with the arrangement, but accepts that he should have seen the possibility of trouble. “There is no doubt that I made a mistake. I should have stopped it and I didn’t.”

His latest project is a book – the chancellorspublished by Polity Press – on the Treasury’s role in running the economy under every chancellor from Gordon Brown to Rishi Sunak.

Davies was appointed by Brown as head of the Financial Services Authority when its supervision was spun off from the newly independent Bank of England in 1997, and he was later criticized for failing to act sufficiently harshly against the city in the lead-up to the 2008 crash. . “At the time, people complained that the financial regulations were too tight and that I was judge and jury in my own court,” he says. “I was accused of being an overpowered supervisor who got in the way of ‘animal spirits’. There was never any criticism in the other direction.”

When asked which of the recent chancellors he has the most time for, Davies chooses Alistair Darling, whose three years at the Treasury between 2007 and 2010 were dominated by the banking crash.

“Alistair had a terrible hand to play. He had no money, a financial crisis and his predecessor as his boss. There was nothing Alistair knew that Gordon didn’t know. Yet he was totally unflappable.”

When he started writing the book, Davies was convinced that he would conclude that the Treasury should be divided into separate financial and economic divisions, the model preferred by most other European countries. He has since changed his mind. “A little check-and-balance in our system is a really good idea,” he says. “If we divided the responsibilities and had a Ministry of Economy and a Ministry of Budget, they would be less powerful individually than the Treasury combined and that would give No. 10 free rein. That would be a mistake.

“This Prime Minister hated the Treasury in part for his pro-EU views, or allegedly pro-EU views, and role in the referendum. But when he found himself in a pit, who but the Treasury could save him?”

If Davies is optimistic about the prospects for NatWest, he is less positive about what the future holds for the UK. “Actually, I’m quite pessimistic. Brexit was a big mistake. You don’t solve the problems of the stragglers by damaging the one part of the country that writes the checks. London pays large amounts of tax and will in the long run be damaged by Brexit.

“I am concerned about political polarization. The same is happening in France [Davies teaches in Paris] and in the US. It may be less bad here than in the US or France, but I feel a kind of bitterness in public life that doesn’t create a good climate for rational solutions to problems.”

Davies says that when he first came to London from Manchester in the 1970s, the capital was ‘gloomy’ and ‘monochrome’, but then became a vibrant, multiracial city. He fears the pendulum is now swinging the other way. “China secedes from the US and there is a war” [in Ukraine]† London has always benefited from globalization and if it goes in the opposite direction, the metropolis may be past its prime.”

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