MONDAY 13th SEPTEMBER 1999 - Prosser Power!
A letter comes out from Derek Wanless, our Group Chief Executive, detailing the management changes around our acquisition of Legal &General. It is immediately clear that David Prosser, current Chief Executive of L&G, will have a very key role, running all the Retail Banking and Wealth Management businesses such as Gartmore and Coutts. He is definitely positioned as Derek’s number two, and maybe even a successor (or threat) to Derek. David Rough from L&G will also have a Board position as head of investment management. There has already been press comment that a desire to inject management talent is one of the main reasons for NW doing this deal. This structure seems to support that theory.
The two joint Chief Executives of Gartmore (I have no idea why we need two) are going with Rough’s arrival. Their departure is all very amicable apparently, which somehow it so often seems to be in situations like this. Tim Jones, the MD of our Retail Bank, will report to Prosser, but is given responsibility for Mortgage Services and Insurance Services, which have both been stand-alone companies, That does not sound like good news for George Wise or Steve Wells, their respective MD's, both of whom I both like and rate highly. The Corporate Bank, run by Tony Shaw, will report into Chip Kruger, who runs Greenwich Capital, the residual remains of NatWest's foray into investment banking. That is a bit of a shock, and I assume Tony will be retiring soon.
Derek’s note also mentions Purchasing's change of reporting line. One thing I feel is disappointing is that he has not taken the opportunity to simplify some other reporting lines. He still has areas like Group Human Resources and Corporate Affairs reporting to him directly, which gives him about a dozen direct reports, more than I think you should expect anyone to handle at that level. Also, Prosser controls about 60% of the company now, so there is a lack of balance. Derek has one report who runs more than half the company, and 10 others who handle the rest. It is the sort of thing that at a lower management levels you just wouldn't do, but Chief Executives get away with because no one will tell them that it is a silly structure.
* 2019 notes; Derek Wanless famously went on to chair Northern Rock’s Risk and Audit committee before it went bust but also wrote well-regarded reports on the NHS which led to a major increase in funding. Sir Derek, as he became, sadly died aged just 64 in 2012 of pancreatic cancer. David Prosser became Sir David Prosser and chaired Investec until his retirement in 2015. Chip (Konrad) Kruger later left Greenwich in 2000 with a payoff of some $48,000,000 according to a divorce hearing. Tim Jones has had an interesting career in start-ups and big firms post NatWest, including doing a very good job as the first CEO of NEST, the "second state pension" scheme. He's a pretty good rock guitarist too.