Paul Flowers: tests put the board off the scent
The idea that Paul Flowers – the disgraced former chairman of the UK’s Co-operative Bank – might have got the job largely because he aced a set of psychometric tests is, on the face of it, astonishing. As we now know, the Methodist minister had little previous banking experience and is being investigated for allegedly buying illegal drugs.
But unfortunately it is increasingly easy for executives to allow the apparent certainty of test data to overrule more subtle and more serious concerns visible to mere human beings. Read more
Barclays may rue having declared its involvement in the Libor lending rate scandal first, but as a consequence it has had first choice of “City grandees” to replace its chairman, Marcus Agius. The bank has managed to land the grandest of those grandees, Sir David Walker.
Author of the Walker report on governance in the financial system (probably the most downloaded document at Barclays’ HQ this week), Sir David is the squeaky-clean face of the old word-is-my-bond City of London, with experience on both sides of the regulatory fence. In 2009, he was one of five wise heads appointed by the Financial Services Authority to vet senior appointments to UK financial institutions (it might be interesting to know just how many of the current and outgoing crop of Barclays’ senior management he helped to approve). If you’re in doubt about what a grandee is, or whether you are one, take my patented multiple-choice questionnaire, published at the time. Read more
The financial sector should be a laboratory for sensible new ideas about incentives – rather than a morgue for dead bonus programmes. So it’s distressing to read that investment banks are lagging behind insurers and retail banks in their efforts to design effective new rewards for their chief risk officers.
CROs are supposed to be the linchpin of tighter self-regulation of post-crisis institutions, at least according to the blueprint prepared by Sir David Walker, the City of London panjandrum. He drew up a report in 2009 on how governance at financial institutions should be improved. But research by Hedley May, a City headhunter, points to a lack of consistency among investment banks in the UK about how to tackle risk officers’ remuneration – and to a worrying lack of individuals who can fulfil all the Walker report’s requirements. Read more