Sir Howard Davies of Nat West: ‘I am very pessimistic. Brexit was a big mistake’ | Banking

sIR Howard Davis is a worried man. He is concerned about political polarization. He is concerned about the long-term effect of Britain’s exit from the European Union In the city of London. He is worried about the undoing of globalization.

The only thing that he does not particularly worry about is the health of the bank he heads, Nat West, In its former form, the Royal Bank of Scotland was on the brink of collapse during the 2008 global financial crisis.

Davis has been the president of NatWest for seven years and the turning point in the bank’s fortunes, he says, was a payoff $4.9 billion (£3.6 billion) fine To US authorities in 2018 for their role in the sub-prime mortgage crisis. Until that point, NatWest had been “scrambling behind the couch” to find capital, but now it is in a better financial position than many similar European banks and has managed to expand. It was, he says, “a game of two halves.”

The football metaphor is telling because Davies has another concern. As a lifelong Manchester City fan, he fears that his team will be victorious in the Premier League title by Liverpool in the final round of matches on Sunday. to relieve


Biography

age 71

family Married to a journalist who died. Two sons, one left and one right.

education Poker Valley Elementary; Manchester Grammar School; Memorial University of Newfoundland; Merton College, Oxford; Stanford University Business School.

Pay “The usual answers are ‘enough’ or ‘no comment’, but £750,000 has been posted to NatWest accounts.”

last vacation Cycling along part of the Rhine River path. “One day I will complete it.”

Best advice given to him “Always show that you can do your boss’s job if necessary.”

Biggest Job Mistake “Agreeing to be the director of LSE. It ended in tears.”

Overused word “Guardiola, as in the song ‘We have Guardiola’, sang to the tune of everything happy.”

how to relax Playing cricket and listening to pianist Brad Meadow: “Not usually at the same time.”


A potential suffering, he bet £100 at 8-1 on Liverpool adding the title and Champions League to the FA Cup and Carabao Cup they have already won.

It’s an “emotional hedge,” he admits, as he discusses a career spanning half a century in which he worked at the Foreign Office, the Treasury and the Bank of England, and was Britain’s largest financial regulator, director general of the Central Bank of Iraq, management consultant and head of the UK’s airport capacity investigation.

When asked which of his many jobs he enjoys most, he chose none of the above but was filled with running an audit committee (later abolished by David Cameron’s government), which considered whether local authorities offered value for money.

“It was a great job. I found that you can make big improvements to the local services, where the differences are so huge. It was really fun and rewarding, and you could see that you were making a difference.”

It was a lot less fun End of Davis’ term as Director of the London School of Economics After concerns were raised about the school’s decision to accept funding from a foundation controlled by Muammar Gaddafi’s son.

Davis says he never asked for the money himself, and thought there was something not quite right about the arrangement, but agreed that he should have found out the possibility of a problem. “There is no doubt that I made a mistake. I should have stopped it and I didn’t.”

His latest book project Consultantspublished by Polity Press – on the role of the treasury in managing the economy under each minister Gordon Brown to Rishi Sunak.

Brown appointed Davies to head the Financial Services Authority when supervision was removed from the newly independent Bank of England in 1997, and later faced criticism for failing to crack down on the city enough during the build-up to the 2008 crash. “At the time, people complained about That financial regulation is very strict and that I was a judge and jury in my court.” “I was accused of being an overpowered regulator who was getting in the way of ‘animal spirits.’ There was no criticism in the other direction.”

Asked which new advisers he has most of their time with, Davis chose Alistair Darling, whose three years at the Treasury between 2007 and 2010 were dominated by a banking meltdown.

“Alistair had a terrible hand to play. He had neither money nor financial crisis and his predecessor was his boss. There was nothing Alistair knew that Gordon did not know. However he was not at all uncomfortable.”

When he began writing the book, Davies was convinced that he would conclude that the treasury should be divided into separate financial and economic departments, the model favored by most other European nations. He has since changed his mind. “A little bit of checking and balancing in our system is a very good idea,” he says. “If we divided the responsibilities and had a department of economic affairs and a department of the budget, they would separately be less powerful than the Treasury together and that would give a free number 10. That would be a mistake.

This prime minister disliked the Treasury in part because of its pro-EU, or pro-EU views, and its role in the referendum. But when he plunged himself into a ditch, 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. “I am actually very pessimistic. Brexit was a big mistake. You don’t solve problems behind him By damaging one area of ​​the country that was writing the checks. London pays large sums of tax and will be hit by Brexit over time.

I worry about political polarization. The same thing happens in France [Davies teaches in Paris] And in the United States. Perhaps the situation is less bad here than in the United States or France, but I feel a kind of bitterness in public life that does not create a good environment for rational solutions to problems.”

When he first came to London from Manchester in the 1970s, Davies says, the capital was “bleak” and “monochromatic”, but later it became a vibrant, multi-ethnic city. He fears that the pendulum could now swing the other way. China is separating from the United States and there is this war [in Ukraine]. London has been the beneficiary of globalization and if it goes in the opposite direction, the cosmopolitan city may well have passed its peak.”

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