Duncan’s Economic Blog

Replacing Kingman & the future of UKFI

Posted in Uncategorized by duncanseconomicblog on July 29, 2009

So now that John Kingman has quit as head of UKFI, the body looking after our interests in the nationalised banks, the question turns to ‘who will replace him?’

The FT says:

Treasury insiders expect Mr Kingman to be replaced in the autumn by a senior banker or hedge fund manager.

Please no. Pretty please. If the Treasury is determined to get someone with private sector experience, and I can see the reasoning, why can’t we have an executive from a non-financial firm? You know, someone that understands about the real economy?

More generally we need to have a proper think about the role of UKFI. Should it’s mandate be to simply act as a custodian of our stake, aiming to off load them at a profit? Or should they be actively used as a tool of a new industrial policy? I favour the second option.

I don’t want RBS, Northern Rock et al used to ‘get the housing market going again’, I want to see them lending to firms with decent prospects. I want to see them providing finance to green technology start ups. They can play a role in rebalancing our economy.

The latest BOE figures show that, in June, lending to households rose 2.6% (year on year), lending to financial companies rose a staggering 34.6%, whilst lending to non-financial companies fell by 1.2%.

This has to be reversed.

 

8 Responses

Subscribe to comments with RSS.

  1. Tom P said, on July 29, 2009 at 12:56 pm

    Why a hedge fund manager specifically rather than just a fund manager? I mean UKFI is not going to be able to be nimble in respect of the eventual disposal of the banks shares, so what would a hedge fund manager specifically bring to the role?

    I’m not even sure it would need a fund manager – it’s hardly a broad portfolio and there is no actual trading going on, just the question of when to sell. And if someone in the market knows exactly when will be the right time to sell RBS and lloyds shares aren’t they more likely to be doing it themselves?

    Bizarre.

  2. CharlieMcMenamin said, on July 29, 2009 at 1:02 pm

    Can you hear make out that muffled sound out of the window Duncan? That’s me shouting ” HEAR BLOODY HEAR!” at the top of my voice in deepest South London…

  3. John said, on July 29, 2009 at 2:14 pm

    “Please no. Pretty please. If the Treasury is determined to get someone with private sector experience, and I can see the reasoning, why can’t we have an executive from a non-financial firm?”

    Ruling yourself out?

    I think they should appoint my father. Seriously, why not? He’s worked in manufacturing industry, fmcg, it, telecommunications and banking, for start-ups, importers, exporters, conglomerates and multinationals, during boom times, and during recessions, as a forensic accountant, a regulatory manager, a management accountant, an auditor, and as a self-employed ‘one man band’. He’d be great. He retires in October, so is totally available. Where’s the advert?

  4. Tim Worstall said, on July 29, 2009 at 5:11 pm

    “why can’t we have an executive from a non-financial firm?”

    You’d like someone with absolutely no idea about banking running large parts of the banking sector?

    “Northern Rock….providing finance to green technology start ups”

    You want a retail bank, one that does not make equity investments, only loans, to be investing in start ups? You want a mortgage specialist trying to crack the green energy market? The technology market?

    In short, you’ve decided that the very bestest thing that can be done, the solution to our economic woes, is that every body should start doing things that they’ve got absolutely no friggin’ idea how to do? No personal skills, no institutional knowledge, no market knowledge, no systems in place?

    Seriously, you want Northern Rock, each and every one of whose employees, managers and executives knows sweet fanny adams about solid oxide fuel cells, the various possible hydrogen cycles, whether PEM will be derailed by platinum prices, people who haven’t the foggiest about why InGaAs is such an exiting material for solar PV but has problems as yet unresolved, in fact, you want people who would fall over while trying to understand, let alone explain, the difference between a Watt and a Watt per hour, to be in charge of investing taxpayers’ money in green technologies?

    You really, really, want people whose expertise is in over-valuing flats in Birkenhead to be trying to decide which technologies might be profitable in trying to stop the oceans from boiling?

    And people look at me all surprised like when I mutter that not all lefty economists are to be trusted on each and every detailed point of their plans?

    Tell you what. I’ve never run an organisation larger than 30 people. I’m a lousy engineer, really, terrible, never understood a blind bit of it. Put me in charge of the National Grid. What could go wrong?

    • duncanseconomicblog said, on July 29, 2009 at 5:21 pm

      “You’d like someone with absolutely no idea about banking running large parts of the banking sector? ”

      As those with lots of experience did such a good job? Equally the chief executive of UKFI is not a loan officer or a risk controller. They can though set broad direction and aims.

      I am not arguing that we should pick some random exec and have them running every part of Lloyds, RBS, et al.

      I am arguing that the banks held by UKFI represent a vast pool of savings and I’d rather that that pool of savings was put to productive work in the real economy.

      The current situation (lending to financials growing at 35% yoy) is crazy.

  5. Tim Worstall said, on July 29, 2009 at 8:18 pm

    “The current situation (lending to financials growing at 35% yoy) is crazy.”

    Really? But I thought we wanted to put liquidity into the banking system?

    • duncanseconomicblog said, on July 30, 2009 at 7:39 am

      Only to the extend that it stops them failing and gets proper lending going. Not as an end in itself.

  6. charliemarks said, on July 29, 2009 at 11:01 pm

    Given the fact that the last bloke left because he wanted a bigger wage than the big one he was getting as a top civil servant… let’s just say I’m not too optimistic about UKFI.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: