THURSDAY 11TH NOVEMBER 1999: Hubris and Parochialism!
Meet with Paul C. He is the Andersens partner responsible for the NatWest account, and I wasn’t sure of him when we first met. He looks something of an old-fashioned City archetype; 40-ish I guess, slicked back hair, posh voice, furled umbrella under his arm. To my surprise, however, I discovered that his background is IT and operational management in industrial companies prior to joining Andersens. He is much smarter than I first assumed, and has a good, dry sense of humour. I suspect handling the complexities and politics of NatWest requires humour as well as good personal skills and patience.
He is also a very useful contact, because he knows more about what is going on in NatWest than almost anyone inside the company. I tell him I am not sure about Redgrave for me personally- nothing to do with whether it is right for NatWest because of the potential pressure of being caught in the middle between the NatWest politics and the pressure from Andersens to deliver success. Rocks and hard places come to mind. He is surprised as he thought I was enthusiastic.
We put out a superb press release; the highlight of the bid so far. Sir David says,
"Bank of Scotland's plans reveal a dangerous blend of hubris and parochialism. In our opinion these plans, particularly in the IT area, require something akin to divine intervention to succeed - which Bank of Scotland has sought in the past, without success."
The divine intervention bit is a dig at their aborted venture with Pat Robertson, the American evangelist. They announced a banking joint venture, aimed at Robertson's flock, only for the gay community to point out his rather, let us say, old-fashioned social attitudes. When someone found an old speech where he made rude comments about Scotland being a den of iniquity, or similar, the venture died a quick, but for BoS, painful death.
I just love the "blend of hubris and parochialism." Well, I suppose there's not much chance of this becoming an amicable agreed deal now! The document then goes into more detail on the claimed cost savings. It questions how much of the BoS claim is arising anyway from initiatives already underway in NatWest. It attacks the claim that they could mange property better than we do; and it is particularly strong on the issue of IT, suggesting that the issues are not "clean and straightforward" as they have claimed, and that they have not made it clear whether BoS or BankWest software will be used post-merger.
BankWest is an Australian subsidiary of BoS, and their software is not yet fully implemented even within BankWest. We also point out the risks of large-scale IT migration and trying to scale up to the NatWest volume. The migration could also call into question the ability to respond to e-commerce and EMU requirements.There is also some interesting analysis from previous mergers, both UK examples such as Lloyds/TSB, and US banks, which suggests that the BoS merger benefits are greatly overstated. And there is no allowance for any customer attrition or revenue loss. Most of the largest US bank mergers in recent times have destroyed rather than created shareholder value. Hubris and parochialism indeed.