CITY AND SUBURBAN
Subsidence at the house of Warburg, or just things that go bump in the City?
CHRISTOPHER FILDES
The man who is his own lawyer is said to have a fool for a client. On that basis, I wonder who can be advising the pre-emi- nent house of S.G.Warburg. Nine months ago Sir David Scholey was reporting record profits, talking about growth and expansion and welcoming Peter Twatchtmann to the board. Since then one bump has followed another. First came a profit warning, timed for the party season at the International Monetary Fund meeting, where it set off some unworthy chortles. Just at that time Warburg had begun to cuddle up to Mor- gan Stanley in New York. In December the engagement was announced. It would, we were told, create a global partnership, but Warburg looked very like the junior part- ner and jobs seemed bound to go. 'If you've got five ounces of brain,' said Mr Twatcht- mann, 'you can work out that there will be redundancies. Fixed-interest is one of their areas of expertise — we can't match them.' The engagement lasted a week, and Mr Twatchmann scarcely lasted longer. Such are the penalties of being right. This week Warburg sacked half its fixed-interest team and pulled out of the international markets they had covered. The chortlers had a field- day: Warburg, they said, had taken fright at its figures, found New York hard to crack, looked for an ally there, was jilted, and now had to beat a public retreat from the very markets that it once had pioneered. War- burg has pulverised City chortlers before now, and can claim (among other things) to act for more than half of our top hundred companies. I would expect, all the same, that if one of them had hit bumps like these, its directors would be round at War- burg's offices, asking for advice.
Chatter boxes
LORD NORTHCLIFFE bought the Lon- don General Taxicab Company to get back some of the money that his Daily Mail jour- nalists were charging him for taxis. There turned out to be a flaw in his reasoning. The journalists (or some of them) were tak- ing buses and using their imagination. I take this as a warning that the taxi business, like the newspaper business, is not as sim- ple as it looks, but I still think there would be a market for a taxi service guaranteed free from chat shows. Taxis drivers used to provide their own, but they now prefer the broadcast version. This has the effect of
locking the passenger into a mobile cell and bombarding him with saloon-bar debate. (`Yes, but what I want to know is, why is the Queen so mean? She could put her hand in her pocket and pay them off. She let her sister get away with it, and now this Camilla ..."But it's in the constitution, if she's a Roman Catholic ..."It would be,just the same with a republic, look at Clinton, look at wossname — Mitterrand ...') The voices that tormented Gilbert Pinfold were at least imaginary. Taxis in Northcliffe's day had sliding glass partitions which were intended as sound-mufflers, but the mod- ern model offers no protection, not even the option of earplugs. Buses are free from this nuisance and quite a bit cheaper, or so I am told.
Coming unfixed or .
THIS TIME, Mexico was going to be dif- ferent. Bankers and investors were pre- pared to bet on it. The people in charge had masters' degrees from the top business schools and had gone on to work for the World Bank. This certainly suggested that they would find a new way of messing things up, and their forced devaluation has reminded markets (as if they needed it) how comprehensively a fixed exchange rate can come unfixed. When this happened in Europe 18 months ago, the finance minis- ters reached for a handy euphemism: the exchange rate mechanism hadn't broken down, good gracious, no, it was just going to move to wider bands. These would fit their currencies like bell-tents and give them ample room to move about. On Spain's currency, they are now beginning to look a tight fit. `The relative absence of credibility in peripheral European coun- tries' (this week's euphemism comes from David McWilliams of UBS) means, he says, that they will have to hoist their interest rates quickly. Even the pound is not look- ing too credible just now.
. . . coming to power
THE POWER Issue — share in it' is our own Government's tired slogan for its latest sell-off. For excitement, turn to Argentina which, undaunted by Mexico's troubles, wants to privatise its nuclear power stations. This campaign could always use the Power Issue ads, which show volcanic explosions.
Ask the owners
NEVER A dull moment at Saatchi & Saatchi, the advertising business now down to its last 10,996 people. Three more of them have flounced out in Maurice Saatchi's wake, and the board, or what remains of it, is under fire from the 15-inch guns of that splendid ironclad, Lord King. He wants to know why it surrendered so tamely to the raiding party from Chicago and let Maurice walk the plank. These raiders had threatened to call a general meeting of Saatchi shareholders and put their demand to the vote. Why, Lord King asks, did the board — `well-endowed with non-executive directors' — not call their hand, let the meeting go ahead and let the shareholders decide? Well-endowed the board may be, but if Mr Saatchi found him- self in a minority, there was and is nothing to stop him calling a general meeting on his own account. Nothing, that is, except the clause in the Companies Act which says that for a shareholder or shareholders to call a meeting, they need to be able to show that they speak for 10 per cent of the share. Mr Saatchi cannot say that or anything like it, and if he has friends who could, they are keeping quite untypically quiet.
Retirement job
SIT. VAC. at Standard Chartered, where the genial Will Manser, who interprets the bank to the press, is retiring to spend more time with his share options. Life is exciting there (the latest commotion was a Hong Kong fine for rat-trading, of all things) and the job requires someone resourceful. I suppose that Standard Chartered could always try to lure Will's predecessor back — a career banker, a likable fellow, cheer- ful and persuasive — went off to try his luck at something else — name's at the tip of my fingers . . Oh, yes: Major.
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