Eldon-Online

Hungry Bankers

With bankers ranking around, or maybe just under, politicians in the popularity ratings, having fallen well behind lawyers but still just maintaining a lead over sex offenders, I note that they now appear to have encountered hard times. That said, certain investment bankers are not having to pull in their belts too tightly, as Howard Winn (In his "LaiSee" column - South China Morning Post) pointed out the other day when he showed scant pity towards Lloyd Blankfein's huge drop in salary to a miserable USD12m. (I note, Howard, you generously called the amount "earnings").

 But not ALL bankers are in easy street. I was much intrigued by a report in that purveyor of quality news in Britain, "The Sun" newspaper the other day where it told the tale of a banker (a female one) who was reportedly jailed for 15 months after biting off the top of a gentleman's ear. The poor chap was having a quiet drink with friends - well maybe not that quiet as it was a stag night - when the lady rushed over and bit off the ear. Even after conviction it remains unclear what caused the attack.

Surely you can picture the situation. With bankers being vilified everywhere, with self- esteem clearly at an all time low, and faced with the prospect of maybe being made redundant or worse, or losing large chunks of pay just like Mr. Blankfein, it is leading bankers to resort to desperate measures. But whereas in the past they only wanted blood - now they apparently want flesh too.

 Actually, you could be forgiven for thinking that I have a long term hatred of bankers, but having been one for 40 years that would be a trifle hard to countenance. I feel very sorry for the victim in the case above, but I have to say that the banking profession - or parts of it anyway, seem to do nothing but thumb their noses at the fact that times have - or certainly should have - changed.

 I have been involved recently, wearing one of my variety of hats, in a series of structured discussions with bankers in cities around Asia, and somewhat less structured conversations in the Middle East. All were commercial banks. And the discussions have had a thread of similarity attached, in every place; the perception of banks and the people who work in them. I have to say, it is less marked in Asia than it seems to be in Europe particularly. But share prices are affected across the Board and it matters not whether you are a good, clean, unbailed-out bank, you are nevertheless tarred with the same brush as those who have not been so clever.

But there is not much point in complaining, because people won't listen anyway. You actually have to do something for yourselves. Every bank I have spoken to brought up the subject of service. I agree. In a world where banking products are easily copied, and where they cannot be differentiated significantly, your points of competitive advantage revolve around service. A breadth of product offerings sure, as long as you do them well, and deliver them easily, effectively, and efficiently - and talk to your client base to find out how they have changed.

 In Asia as well as in the Middle East, the demographics are different as are the expectations, from region to region and country to country. If you are 55 years old, and running a financial institution where the average age of your clients is 32, do you actually know what they want - or are you giving them what you think they should have, delivered in what they at least would consider to be an old fashioned way?

 If that is what you are doing, it won't help to change the public perception of bankers, who will become more and more depressed and instead of biting off your hand for new business, they will be biting off your ears!

PEP Talk ... Two

Now, where was I? I think my intended short Blog of 17 November started to grow legs once I got into it - and if you have come into this Blog "cold" as it were, PEP stands for People, Economics and Politics!

It started off by saying that you should never judge a person's intelligence by the way they dress and look, and then I was suggesting that our global Economic woes were largely caused by People. We have to a large extent brought this current crisis on ourselves, (but of course are quick to blame everyone and anything else!). I then started down the "Economics" path - busily distancing myself from any specialist knowledge on the subject, but just speculating (oops, that word again!) on what might happen next, in particular in the Eurozone. And it is this Eurozone region, to me anyway, that is currently at the heart of what is likely to happen next.

We all know Greece has a problem. Unless they are prepared to accept tough measures that will undoubtedly impact their lifestyle, they will go bankrupt. Why will anyone want to lend more to a Government that cannot repay its debts because they cannot raise enough money to do so? This is serious enough, but it has other implications too.

For example a similar story might now be emerging in Italy. This is a country that has to re-negotiate approximately Euros 350 billion of debt next year. That is, renegotiate or repay. It cannot do the latter. But if you borrow - you pay interest. As a "sovereign" borrower, previously they might have had to pay 3 or 4% interest annually but the most recent issue of Italian Government 10 year bonds had an interest rate of around 6.8% per annum; expensive - very! If that trend continues, then next year's re-negotiations could be at historic highs making it hard for Italy to even service the interest repayment! The same story is repeated in Spain and Portugal.

But if you are still with me - it gets even worse. Banks who make these loans to Governments have in the past not had to put any capital reserves to one side against this sovereign debt, because Governments always repay!! But Greece has now asked its lenders to take a 50% reduction in the amounts it will repay, which means that Government debt can no longer be considered "risk-free". Therefore, in future banks will probably be asked to provide some capital cover for this type of lending. Maybe it will be 50%, maybe it will be 20%. I don't know the answer, but what it will mean is that banks will have to raise more capital in the market - and how much is available for them to borrow to increase their balance sheets? Already one Italian bank has started the process, others will have to follow and the French and German banks will not be immune at all. The two major French banks are already showing signs of strain.

And I'm not finished yet. With the gloom already in the markets, add to that the fact it is becoming clear in Asia that shipments out of the region to the West particularly, USA and the Eurozone - are sharply down as people spend less in those econmies and you can see that there is going to be a ripple effect into the markets here, in Asia.

As matters stand today, we have problems. And they are not being tackled well. In fact the structure of the Eurozone doesn't help. Too many countries are involved when it comes to making a decision, which renders the process to make decisions neither easy nor quick. And each month's delay in taking action compounds the problem.

 So, we have thought about the People. We have done a little about the Economics - and which is the last part of the piece - the true villains, perhaps? The Politicians. That breed of people who bear a strong resemblance to analysts and rating agencies.

Like analysts because they have short time horizons. The next election is their key target. How to maximise their people-popularity - which by the way is not usually achieved by taking strong measures that affect lifestyles even if their reluctance is likely to shove the country deeper in debt. (Of the "bad" economies in Europe at present perhaps Ireland is the stand out success. They know something has to be done, and they do seem to be doing it).

Like rating agencies because they have a CYA mentality (with apologies to readers of a gentle disposition). 

Thus the dilemma. Most people I speak to believe that the economic reality of all this mess at present can only be resolved by firm and swift action. If letting Greece go is the answer - let them go. If re-designing the Eurozone, even putting it back to the original founding members (with or without Italy?) is the answer - then do it. BUT - the politicians have an eye on their own futures, their jobs, their pensions ... and not losing face by having created, and then having to disband a concept that has grown out of control. So we have "Economic Reality vs Political Expediency". 

Is this a game to win or lose - or will it more likely end up as just another "muddle through" - with compromises all round.

Oh, I almost forgot. If you want China or anyone else like them to help do not think they will do so through Europe directly. They won't. There is no upside for them. But keep an eye on the IMF instead - and there, maybe, you will find an answer.

A PEP Talk

Really - a pep talk? You mean one of those rah rah things to get everyone jumping up and down to happy clappy music and pretending to feel good about life in general afterwards? About life in a world that seems to be full of mostly bad news? 

Umm, well no, actually! I mean PEP as in People, Economics and Politics. I have, of course in previous Blogs admitted to knowing not a lot about Economics, and I have never been particularly Political - so this could be mercifully short! 

The initial inspiration for this Blog actually came from a musically related piece I read recently, together with some discussions I have been a part of during the last week concerning Europe in particular.

Look at the picture below and before reading on, see if you can identify the person - and consider the impression you get from the picture.

Identity? Anyone?

If of course you said it was probably an early and previously unpublished picture of me in an earlier life - wrong!!

But if you said it was obviously Gene Simmons, the frontman of the hugely successful rock group Kiss, congratulations, although I suspect that few of the people who I believe read this Blog would have been terribly sure! But whether you knew or not, I suspect the image in your mind created by the picture would have led you to stereotypical thoughts about someone who dresses and looks like that - musically talented probably, but not terribly articulate or capable of original intellectual thought or business sense, and definitely someone you hoped your daughter didn't fancy! If that was your view of Mr. Simmons you would be ... mostly wrong.

Kiss is one the world's most talented and awarded rock bands, and have maintained their appeal for over three decades. But what is perhaps less well known is that frontman Simmons is also a successful businessman who recently made a speech at the London Business School where amongst other lines were things like:

 - Countries are businesses — they have imports and exports and you want your exports to be higher than your imports so you can have a profit.

 - Government makes money by taxing and spending. It's so simple. If you spend more than you tax, you're out of business. MPs don't know what they're talking about.

 - And we created this miserable economic state. It's like fat people who think it's the bakery's fault they got fat. No, you kept going in there and you kept eating cake. It's not the bakery's responsibility to tell you not to eat so much.

 - (In the same way that) banks shouldn't have to tell you not to borrow so much. They're banks — they're supposed to lend you money. If you can't afford to take out £100,000, don't take out a £400,000 mortgage.

And I particularly like the last one

 - It's your responsibility to be a grown-up and take care of yourself.

This all sounds remarkably like common sense to me. For too long have some people believed in the theory that the world owes them a living. In some countries it seems to be worse than others. When they have worked for a few years, they believe they now have earned the right to put their feet up aged 50, and take a full pension - to which they have not contributed nearly enough - for the rest of their lives (Greece). Or they have been politicians whether for 30 years or 30 days, they are also entitled to a full pension (Italy).

You know what? When Chancellor Bismarck first thought, back in the days when life expectancy was around the late 40s, that it would be fair to let someone be looked after by the State if they worked beyond a certain age, he came up with the idea of a retirement age of 65. Given today's longevity tables, I am told that to qualify for a pension now on the same terms, you would need to live to be 112.

So, that's something about "people". Don't judge people by the way they look, for a start. And wake up to the idea that we need to fend for ourselves more. If you are in debt, is it because the banks have forced money on you ... or because you were undisciplined in your spending? Our society - at least some of it in parts of Europe (and elsewhere I am sure) - needs to temper its expectations. Do these people who want to "occupy" things (like Wall Street, St Pauls) really think they are hard done by, or is it just rent a crowd becasue it's something to do?

And so, as we move to the "E", I now realize this is getting to be longer than I had intended. Let me attempt some brevity.

You are not paying attention to the world around you if you are unaware that Europe is in an economic mess. But it will all be sorted out soon, won't it?

Actually ...... it doesn't look like it any time soon! And to add more depressing news to fuel the fires of uncertainty, there are not going to be (m)any places anywhere in the world unaffected to some degree or another. The American Financial Crisis has now hit Europe hard. There is more to follow.

According to Gene Simmons, you cannot spend money when you don't collect enough to spend. You certainly can't run your household like that can you? If you do not have enough money to pay the butcher, you don't eat meat. If you live in Greece, where people do not seem to pay their taxes, for example, then the country does not have enough money to pay for pensions or their other obligations - like loan repayments.

Already some banks are in as much trouble as the countries themselves, and a continuation of this situation will spill over into business and growth. This will lead to a slow down in their economies and unemployment. I wonder how many people have grasped this yet, because judging by many media articles the potential seriousness of this has not got through.

But in the interests of space and time, let's keep that for the next Blog.

Economies - Should We Really Be That Surprised?

When we got into office, the thing that surprised me most was to find that things were just as bad as we'd been saying they were. 
                                                                    (John F. Kennedy)

An "interesting" past week as world markets tumble, America just avoids defaulting on its debts, the economies of Spain and Italy look fragile (yawn!), one of the rating agencies (you remember them don't you - the same people that rated all those rubbishy bonds as AAA and got away with it?) downgrades America's credit rating, and inflation continues to hit the headlines. China says what others could echo and basically accuses America of over-spending. European finance ministers rush around and will undoubtedly be looking to Germany to provide more answers and money. And as an aside, the mega rich have merely become super rich and East Africa continues to have absolutely nothing at all - particularly food and water.

But why are some people expressing surprise at all this?

How long has the acronym PIGS - or PIIGs been around? (Portugal, Italy, Ireland, Greece, Spain). Having dealt with Portugal, Ireland and - in part although unsuccessfully, Greece - did we suddenly think that Italy and Spain had become invisible or immune?

Markets rallied on Friday as the monthly US job figures looked better. How convenient. But then we have been here before. One month good and then one month bad. Look, have you ever tried to lose weight? When you do so, don't they say do NOT stand on the scales daily? Why do they do that? Because they know that weight fluctuates, and they want to avoid you getting disheartened when even after a heavy workout your weight has not decreased as you think it should have. So it is with jobs. There are swings monthly, but they have to start showing consistency of direction over a period of months to mean anything. Month to month comparisons on employment numbers, like day to day comparisons of weight, are not particularly meaningful.

In our current world of immediate gratification, instant statistics, and "in-depth" on the spot analysis, we have become besotted with analysing the heck out of everything and trying to be the first with the future projections. How often do we review the "expert" forecasts made a year or two earlier, only to discover if we did so that those projections were a load of codswallop! But as you all know, the more dramatic the pronouncements, the greater the media impact and with a public prone to panic, that impact on behaviour is one of sadly predictable overreaction.

What I am attempting to portray here is that while I believe the situation today is serious and needs to be dealt with - we should not be surprised that we have reached this point. But there is no doubt that we should have been better prepared. Indeed maybe we could have been, although I worry that political expediency might have had a hand in our current predicament. A desire to ensure that bad news was kept to a minimum; although the UK's hugely unpopular moves to reign in the economy are looking more and more as if for once they grasped the idea (and the nettle) early in the game.

There is no easy or quick solution to this, especially with a public that is already spooked. Indeed I was listening to a UK radio station yesterday where the popular views of callers in to the programme almost without exception were, simply, let the poor economies fail. The heck with the consequences.

And by the way, the callers all said that the blame for this current state of affairs should be laid at the door of the banks who had been irresponsible, profligate, saved by Governments, and were now making money out of taxpayer bailouts. (Looking at the recent UK banking results they are certainly not making too much money!)

The debt crisis aside, we have had Governments overspending, and inflation beginning to become the problem we had earlier predicted it would be. We have been tackling issues on a piece-meal basis; trying to shut the stable door on an already bolted horse, and we now need to take a more coordinated approach where countries come clean about the state of their economies. Where spending is trimmed to a level of affordability. Where inflationary pressures are mitigated, and I put my hand up here and say as I have done before, I am no economist and I do not have the necessary solutions - but I know there are plenty of people who do - if only they could agree. But whatever decisions are taken - politics need to be put to one side.

Job creation is also an issue. There are too many people and not enough jobs to go round. It is another problem that is not going to get easier to solve. I am looking at present, for example, at banks - particularly following recent announcements of job reductions - in the light of technology and how services will be delivered in future to generations of technically comfortable consumers. (More job losses I fear!)

Has the teetering recovery, the "good news" we have been fed selectively by various governments who didn't dare mention the bad, finally got to the point where the feared "double dip" recession is going to take hold and plunge us all into the darkest of days, months and years? Where the solutions are going to take years to re-pay?

I actually remain relatively optimistic. Hopeful that the crisis can be solved by strong leadership (if we have any), and by common sense and openness. A doctor can only stand a chance of diagnosing your ailing condition - and suggesting a remedy - if you are totally open about the symptoms. And if there is a later problem or relapse, don't hide it.

There should be no-one surprised by this latest turn of events. It has been staring us in the face all along, waiting to happen. The medicine will be unpleasant, but unless we want the problem to become hereditary we will have to take it.

And in the Blue Corner ... Singapore vs Hong Kong?

The end of this week sees a heavyweight boxing reunification title match between David Haye, the British holder of one title and Wladimir Klitschko the Ukrainian holder of two titles. An event that has been long anticipated, and will see plenty of action, I have no doubt. 

So, why the reference to boxing? In a somewhat lower-key event that has nevertheless been building up into something more aggressive recently, I have been keeping an eye on the rivalry that undoubtedly exists between Hong Kong and Singapore. A sort of virtual boxing contest where perhaps the smaller contender has been showing signs of punching above its weight.

I thought about it in particular when I noticed a revival of interest in a Blog I wrote just over two years ago on the debate about Hong Kong vs Shanghai. I had no idea why this should again be on the mind of readers, unless it was part of the regular round of paranoia on the subject - usually for the less confident people of Hong Kong. The blog concluded then that Hong Kong, if it stayed focused, flexible and positive would remain of significant global importance, but needed to keep Shanghai in its sights. 

On reflection, I then realised that I had become much more focused on the positioning of Singapore in recent months, after the election, because here is an economy and a political structure in transition - and it's making waves. I thought a quick look at the situation - as usual from my own perspective - was warranted.

Before I get started, I should say I am familiar with the old arguments about Singapore being more focused, smaller, and able to be more flexible than Hong Kong, and that Hong Kong has its hands tied and should not compete in the same manner with Singapore. I am sorry to say that on the latter part I disagree. We do not have to have our hands tied, and continuously worry about the blanket opposition that seems to typify debates in a negative Legco.

I should also say, having said it before, that despite the frustrations everyone feels occasionally, Hong Kong is my home. I enjoy being here. I want us to do well domestically and to continue working on areas of social reform, but without giving everything away for nothing in return. But our prosperity also relies on our performance internationally and as a global business centre. Thus I am not going to throw in the towel just because we are looking more and more as if we have lost our way, but we have to wake up. In another more recent blog, in September last year, I spoke of Hong Kong's attitude towards the present and the future as giving me some cause for concern. That continues to be the case, but I digress.

Today I am hearing Singapore's name being mentioned a little too often for Hong Kong's own good.

In the years before I retired, I was invited on a number of occasions to lunches in Hong Kong hosted by some very senior officials from Singapore. Lunches that were attended by a small number of Hong Kong businessmen who were variously flattered for their business acumen (in fairness, justifiably in many cases), and then asked to share the secrets of their success - which they did willingly. It seems that after the information had been harvested, those officials would return to Singapore and sift through the commentary provided to see if there was anything that might be of value to Singapore. Ideas they could use, or adapt to suit their own purposes. Whether it was a successful exercise or not is hard to say today - but the real point was, they were prepared to seek out ideas and didn't mind where they came from.

I remarked at the time that I could not see any Hong Kong official seeing the need to do the same sort of thing in Singapore, as we seemed to believe we had all the answers anyway.

Fast forward to today, and what are we hearing?

I am talking about what I hear from people I speak to with practical experience. I am all too familiar with the statistics that pop out from Government to indicate how well Hong Kong is doing in attracting new offices and headquarters. No, I am hearing from people trying to employ quality internationally minded linguistically competent staff, trying to find school places in Hong Kong, and trying to find a general quality of life that is attractive. From people who are looking at choices available - Singapore, Hong Kong or China direct. People who are looking at legal structures in which they would feel comfortable operating, looking at the rules and regulations in effect or their likely trend, and searching for incentives - real incentives.

In all of this searching, Hong Kong has of course one major attribute that Singapore just cannot replicate - and that is proximity to China. And a special relationship that, although perhaps strained at times, has certainly been favourable to Hong Kong. But for the rest?

Despite a few good days recently in Hong Kong where the skies have returned temporarily to the blues of some decades back, one cannot help but feel this is temporary. And if it is not - what has changed? I saw an argument that our recent good weather is a reflection of the fact that factories in China are not so active as previously and that therefore all our earlier pollution problems were due entirely to factories in China (operated mainly, by the way, by Hong Kong businesses). I don't think so, somehow.

Wind - of one sort or another - has always had an impact on our pollution levels!!

I was told the other day that an incoming executive from an established Hong Kong entity looking for a school place for his children in an ESF school had one of them at 120 on the waiting list! He chose Singapore instead. We are not going to gain, or even obtain credibility or talent if that continues to be the case. I understand that Harrow School's total registration in Hong Kong for new students was filled in less than an hour after opening. I have no independent verification if this is true, but it wouldn't surprise me.

And most compelling of all is perhaps Singapore's willingness to do "deals". In this, where Hong Kong may hold the moral high ground and be applauded by trying to ensure that everyone is treated as fairly as possible, it is nevertheless unlikely to win us new businesses.

In any business environment, you occasionally have to make special offers to attract new business. Does this disadvantage existing players in the market? - Yes, but then if you are attracting the right sort of business, the overall benefits could be higher - if you are efficient and competitive. And it is here that Singapore is currently winning out - tax concessions are significant when compared to Hong Kong. And the other benefits being offered would certainly match Hong Kong on the face of it. And if the reality is different - then we are not articulating our competitiveness sufficiently well.

If this is a heavyweight contest, then we are certainly facing an onslaught of jabs right now. If we don't protect ourselves by becoming the aggressor, then the body blows will start to take their toll, and we will be vulnerable to the killer punch.

Boxing matches usually have a result and although there may be a re-match, the loser is often at a disadvantage. If we are in the early rounds, we had better re-think our strategy as we move deeper into the fight, because we may be falling behind on points.

We need some inspired and inspiring leadership to start changing the characteristics of the fight, yet June 2012 for a change of trainer sounds a long way off.

But as they used to say, before it became politically incorrect to do so, may the best man (person) win! 

For The Record ...

My intended quiet return to do something very part time, very non-executive for an unlisted 100% owned subsidiary of an HSBC company seems to have been derailed rather. But there we are - it happens - or some such expression!

I thought that rather than making a big fuss - not my preferred style anyway - I would just get on with it but there are now a few stories emerging, as they do, so I thought a brief note should answer most of the questions raised so far - and maybe answer some that are still "back of mind".

Firstly; Am I completely nuts? Undoubtedly!

I mean let's face it, who in their right mind would return to an industry that is still on the top of everyone's "hate list", and to a region where political strife, battlefields and "hit lists" are the current order of the day? So - to paraphrase Teresa Norton's old SCMP column opening line ... "Yes, I must be nuts!".

Much has been made of my "return from retirement". Technically correct of course insofar as the Bank is concerned, but I have hardly been retired for the last six years and have maintained an active working lifestyle, as those around me will testify. In particular my friends in PricewaterhouseCoopers where I will be remaining as Senior Adviser, but also a variety of other institutions.

My term with the Dubai International Financial Centre Authority (DIFCA) - which I have thoroughly enjoyed, was coming to its natural end this coming month. I think five years is a good run, they have a sound base from which to go forward, and we will part on mutually excellent terms.

Will I relocate to the Middle East? Actually, when I became Chairman of the DIFCA many in Hong Kong thought I had moved to the Middle East then. I am still surprised by people asking me if I am in town for long, from the Middle East.

Fact! I never moved to the Middle East, and will not do so now. Hong Kong is my home, and it is where I am staying.

What is my role? It is as non-executive Chairman of HSBC Bank Middle East Limited (HBME). The Bank, as I stated above, is an unlisted 100% subsidiary of the Holding company. Previous Chairmen of HBME have come from Executives within the HSBC Group, and therefore as a non-executive I believe I bring an additional degree of independence (those who know me will say very independent) to their deliberations backed by a 40+ year association with the region. My role is to run an effective Board and ensure, with my fellow directors, that the Bank's policies and strategies in the Middle East are proceeding in line with the Group's stated aims - as well as providing advice where I can.

Why am I doing it - or as one person wrote to me - "don't you like the idea of retirement"? Indeed - a good question. I could say, "because I want to, and I can" but that sounds a bit too flippant, even for me. How about, "Because I enjoy working and being active, while I can"?

After Stuart Gulliver knew I was coming to the end of my time with the DIFCA, which was after he had become CEO of the HSBC Group, he asked if I would have any interest in taking on the role in HBME. It was as simple as that. Stuart knows my background in the Middle East and he is, like me, also aware of the growing synergies between the Middle East and Asia - where I also have a bit of experience. 

Happily, my contacts in the Middle East have remained over the years, I am still able to put one foot in front the other and am not totally gaga; (other than agreeing to take the role on at all, of course!) 

And there you have it!

I hope that I will contribute satisfactorily once again to HSBC (of which I remain a shareholder!) - and that we can get through what is undoubtedly going to be an interesting and difficult time in the region.

A Line On Property

Not Hong Kong property, (about which enough has been written), but property from elsewhere being sold in Hong Kong!

I often get surprised by the advertisements that appear in our local Hong Kong press, extolling the virtues of buying a desirable property in say Melbourne or London, although the latter is probably more prevalent. Actually, "uncomfortable" might be a better word than "surprised". Not because the advertisements say anything illegal or technically inaccurate, of course. Now that wouldn't be allowed, would it? No, I get uncomfortable because the London pad of your dreams, "only 25 minutes from London's Oxford Street shopping area by underground train" is often not quite what it seems.

Some of my Hong Kong friends have a reasonable working knowledge of London - or parts of it, and have property there. But this is property in the more fashionable areas of the city like Belgravia, Sloane Square, smart parts of Victoria, and Mayfair. Areas of a rather genteel London (well, everything is relative!), slap bang next door to Harrods, a genuinely short distance to the fashionable shops on Bond Street or Regent Street, and Theatreland. Good restaurants and Clubs.

But these are not quite the geographical locations of the advertising in question.

For example, there have been some recent opportunities to buy properties in the "newly fashionable" areas of Islington and Edgware. And the advertisements are always accompanied by a little diagrammatic showing you just how "easy" it is to hit the centre of London in a short period of time by train - from the moment the train starts its journey.  But let me tell you that if you are stuck at the top end of the Northern Line on the London Underground, which is where these little satellite towns/villages are located, and if you think you are going to have an easy ride on the tube every day to get to the famous London shops and sights, think hard before you buy.

The Northern Line is arguably the worst of the London Underground's lines. It was started in about 1890, it is deep, claustrophobic, carries over 200 million passengers a year - and is starting renovations that will see the line closed at weekends for about two years, and a reduced service in the evenings, just as you wanted to come home from dinner. It probably has the poorest record for delays of any line in London.

But that information is not included in the sales pitch. Of course, why would you? 

Then just recently there have been the advertisements for property in Croydon, the self-styled "third city" of London. (Not sure who gave it that name - maybe the same people who came up with "Hong Kong - Asia's World City"?). But Croydon less than three years ago was the subject of a London evening newspaper report that said, "Poor Croydon badly needs a facelift. Computer models of how the badly lined south London capital might look in five years' time were presented in a wishful brochure last week. Examination of the treatment plan reveals both naïve optimism and a refusal to face uncomfortable truths". Recent investigation suggests little has changed so far.

And like so many other cities around the world, it has its seamier side. Indeed, one of its (in)famous daughters said of it only last month "It's so rough. My Dad was in the pub the other day and somebody got shot". The speaker? Kate Moss - she of supermodel fame. The subsequent commentary on her remarks from local inhabitants was, perhaps surprisingly, actually largely supportive of her words, although one wit reportedly said - "Don't knock Croydon Kate, if we didn't have the criminals where would you get your drugs from?" Naughty - but kind of funny.

The purpose of these observations is not to disparage Islington, or Edgware or even Croydon. I am sure they are nice places to live in, and I am equally sure that the properties being sold are of a decent quality. But from the people in Hong Kong I have asked who have shown an interest in acquiring something in London, (and not the same types as those with the properties at the smart end of town), it is clear that they have no idea where they are buying. (It's a bit like the stocks they buy on the Hang Seng index - they buy by the stock number, not the underlying business of the company). London to them is like putting a circle around Central, Mid Levels and the Peak, whereas what is on offer is like living at the Lo Wu border or Yuen Long. It is not what they expect.

The moral of the story?

Even though the pictures look wonderful, the price is right, and the countryside appealing - is it actually where you expected to be? Is the station entrance for your 25 minute journey to town outside your front door, or do you have to walk 20 minutes to get there? Are the pictures you are being shown an artist's impression, missing out the warehouses in the street behind you, or are they genuine photographs of the neighbourhood? And if you can afford to spend £200,000 or more on a property, you should be able to spend a little more to go visit your potential purchase before you sign on the dotted line - even if the sales person offers you a further 10% discount if you sign then and there.

What You See Is Not Always What You Get.

Some months ago BP, the international US/British owned and run oil company suddenly became known in America as British Petroleum. Everyone pointed fingers at them for creating an incredibly messy oil spill that has, undoubtedly and tragically, affected the lives and the livelihood of many people in the Southern USA. It was, according to the media at least, going to be a blight on the region for years - generations even. It led to the description by President Obama as being the "worst environmental disaster the USA has ever faced". Despite the heavy involvement of the US in terms of people, operating companies, investors and jobs, this "disaster" was a British creation, and nearly derailed relationships between the USA and the United Kingdom. 

Fast-forward to today though, and people are having to ask themselves - was this really the devastating event that was first thought?

The statistics from such august (adjective) bodies as the US National Oceanic and Atmospheric Administration seem to support the current views being put forward by the scientists and the marine biologists, most of who now apparently think that the Exxon Valdez spill was far more serious that that created by the BP disaster. In fact, they say, nature has cleaned up much of the mess created by BP and the impact will be far less significant than originally thought. Rather supportive of the views expressed (somewhat badly, admittedly) initially by Mr. Hayward, the BP CEO.

Of course, the debate will continue over the numbers, and "experts" - professional and amateur - will continue to argue the minutiae. But the bigger picture suggests that the original reactions - prompted by a media desperate for bad news, and a US Administration desperate to show its mettle - may have been overdone.

But are we surprised? Do we not live in a world fascinated by short termism - a world where it seems to be okay to make hurried comments and move on - irrespective of the long term facts or other realities? 

In some ways it has been the same with the financial crisis, and everything that led up to it. Greed, shouted everyone - a headlong rush to jump on a short term bandwagon to make obscene amounts of money. A short term culture of bonuses. But was that the real cause? Okay, so perhaps it is a little unfair to go all the way back to the debate about - and subsequent implementation of tools such as - quarterly reporting - but maybe only a little. My memory was jogged last week by a comment from a Bank CEO (no not HSBC!), bemoaning the fact that his shareholders in general and the analysts in particular were spending all their time focusing on his quarterly results, and not giving him time to focus on building for the long term. Could the financial crisis have been the long term result of introducing regulations like quarterly reporting?

Were we any better off once quarterly reporting was introduced to the banking industry? Did it save us from the financial crisis? Of course the answer is no. In fact the British Bankers Association some four or five months ago issued an interesting paper that seemed to suggest that regulators would be much better served by taking a system-wide macro-prudential perspective. They even used the Hong Kong Monetary Authority as a good example of such a system.

So, you may think you have covered the bases, but the end result is not necessarily what you expect it to be.

Therefore the question is - why do we overreact to situations, and can we not stop it?

Probably not. Sadly. There are too many countries today that follow a "blame" culture. They want to find people doing things that are considered wrong, in their eyes, so they can blame them. And who starts everyone off on this cycle? - usually the media. And if we are not careful it is going to lead the world into a downward spiral. If you haven't read "1984"  or Huxley's "Brave New World", or have not done so recently - this is a view of the future we will be left with when we have done all the blaming we can!

Oil spills and financial crises are not nearly as bad as world wars, but the hype that can be built up around them and events like them could, one day, lead us backwards rather than forwards. 

These issues in our world need considered thinking, balance and perspective. We must weigh very carefully the effect of loose words, actions and ill thought-through regulations. 

Sporting Chance...in Business Too

I guess I take, at a minimum, a passing interest in just about any sport (or game), or achievement in its broadest sense, although I prefer some more than others. Soccer, for instance, has never really grabbed me in the same way it seems to grab millions of others - a large percentage of whom have descended on South Africa to watch the 2010 World Cup. I am more likely to go out of my way to physically watch a rugby match over a soccer match - in fact I think the last soccer match I attended was at Vicarage Road in North West London to watch Watford play somebody like Exeter in Third Division South. As that particular Division was abandoned at the end of the 1957/58 season, you might get some idea of my level of interest (and age!).

That said I will watch the scores and the progress of various teams through the competition, although without getting wildly excited about it all. But sports, like businesses, are often about teams and the personalities within them, their successes and the failures. And a couple of very different events in the last week indicated how sport has parallels with - and lessons for - business.

First up; The Goalkeeper!!

The name Robert Green is one that is well known to every British soccer aficionado today, as well as soccer lovers from many other countries too. It was the hapless Mr. Green who allowed the Americans to slip a ball past him and into the England goal, giving the USA a 1 -1 draw in their opening World Cup match between the two countries. And Mr. Green seems to have been blamed by just about everyone for being such a "butterfingers" (polite version!).

Excuse me – but why him, alone?

Where was the goal-scoring machine that was supposed to be knocking goals into the USA net at the other end of the pitch? Had they gone to sleep after Gerrard scored a goal for England in the first four minutes of the match? Wasn't it up to them to do their bit to score, as much as it was Green's job to keep the Americans out of the English goal? This is supposed to be a "team game", people. That means the blame should not just rest on the shoulders of one person. Perhaps if anyone has to take the "blame" overall, it should be the captain. For not making the team work hard enough to score goals. For not immediately protecting his goalkeeper from some of the blame!

And so to business, and BP.

Mr. Tony "I want my life back" Hayward, the CEO of BP is a name that is well known to every American, and many other people around the globe. And as "Captain" he is taking the blame for BP's oil spill. As I have said before, BP need to ensure that they do everything they can to clean up this mess, (and pay for it), but there seem to be a lot of "players" in the background who are perfectly happy to see BP take all the heat. The US companies who are the operators of the rigs, the US officials who refused the offer of help made by the British Government in the first four days of the disaster over chemicals that could have been deployed immediately with a view to averting at least some of the ecological disaster that ensued, and even perhaps the President himself who could have acted more swiftly than he did and who now appears to be making up for lost time and ensuring the blame is focused on others, rather than himself.

In both of the above cases, in sport as in business, one person takes the blame while others lurk in the background hoping that the spotlight will not suddenly shine on them.

The other event was that involving the 16 year old American girl, Abby Sunderland, who wanted to sail round the world single handedly to break the age record for doing so.

Putting aside any concerns about ages (for example the Dutch authorities have, so far at least, successfully banned a 14 year old from making a similar attempt - which they will review in July 2010), the issue here is more about the chances one takes - and who pays if it goes wrong.

Miss Sunderland, by all accounts an accomplished sailor despite her age, worryingly went missing in the ocean after encountering some difficulties. A particular event that was not an age or experience thing, and one that could have happened to anyone, whether they were aged 16 or 60. Fortunately in this instance there was a happy ending. She was found, and eventually rescued by a ship that went well out of its way to effect the recovery. The girl herself, clearly appropriately thankful and happy for the rescue, said she wanted to try and do it again - even though she would not make it as the youngest any more. Frankly, I have no difficulty with  that. If the people responsible for her believe she is up to it, it's for them to decide. What does trouble me though is who has paid for the rescue? The shipping company? The insurers - can you insure against something like this? In other words, as long as the rescuers have been compensated in full for their costs then Ms Sunderland should be free to sail again – but perhaps not until the costs of the rescue have been recovered!

And yes, you know where I'm going with this don't you? If the financial ship (global, regional or domestic) hits stormy waters, and as a result if Governments put their hands in their pockets (or, more accurately, YOUR pockets) to rescue someone who has got into difficulties and needs to be rescued, you shouldn't give the “rescuee” complete freedom to go off and do their own thing again until they have repaid their debt!!

In sport...as in business, there are risks. You take chances and if, as a result, there are costs involved in resolving them that involve other agencies, then the dues should be repaid to them before you move on.

What do we learn from all this?

There are many lessons in sport that apply to businesses too. Business is a team sport. The team needs a captain, a leader, but the team won't work unless it operates together. Even if you are sailing around the world singlehandedly there will be a support team somewhere. And in business, as in sport, you take risks and chances to get better and better, but there is a price to pay if you don’t get it right.

Who Wants To Be A ... Non-Executive Director?

"Be careful what you wish for - you may just get it" is now well established as a cliché. But how appropriate it is, when applied to the role of the Non Executive Director today.

It was not that long ago when being invited to join the Board of a prestigious company was considered to be an honour, but often where the duties of a director were not particularly onerous. Even if the company was progressive, and recognised the benefit of good external advice. And of course there were plenty of the "old boy network" Boards where your role was to remain silent, and agree with the Chairman as directed. Today, however, if you wish for and receive that Board seat invitation take care; it may just come and bite you in unpleasant places.

As more and more companies globally are required by legislation to have non-executive directors, you may still find situations where the Board is not really clear on your role, and many first time directors are not really clear on their responsibilities. Or put another way, in an article by British dealmaker Jo High 

"For some organisations, particularly owner managers, a Non-Executive Director (NED) has much in common with a Bidet! Being something one quite fancies but not really something one is clear on how to use!"

Examine the role of the NED today, and particularly the Independent NED. A person who is required, often by law, to take as much responsibility for the running of company as an Executive Director, but to do so on a part-time basis using whatever information they are "fed". And in times of trouble, a NED trying to hide behind claims of receiving "insufficient information” is unlikely to receive much sympathy from shareholders and the media alike. Instead, they are more likely to face accusations of incompetence for failing in their duties. "Given your experience", the critics will say. "you should have known what questions to ask!"

 Why would anyone willingly subject himself or herself to such reputational and professional risk?

The whole issue of Board Members is under review around the world. Collapsed financial institutions are having their Boards reviewed - and often replaced! Corporate Governance issues today are much more a feature of Board deliberations than ever before. And rightly so, given the apparent inability of some of our most highly paid and high profile corporate leaders to be trusted to tell the whole truth. Boards are now required to look at major appointments, strategy, and performance. They need to consider, in depth, the audit and remuneration issues faced by the company. And they do so on behalf of the shareholders who, independently, they represent.

As a result, non-executive directors are finding it necessary to restrict the number of appointments they accept and therefore the supply is becoming scarcer. 

Hong Kong was, perhaps, initially not as quick to make changes as fast as some other places, but there have been improvements. Activists like Christine Loh and David Webb have actually achieved quite a lot in this arena - one quietly and steadily, the other in a more publicity seeking manner, - but love them or loathe them (and I don't actually loathe David Webb - I just don't particularly like him since the day he publicly questioned my independence and therefore my integrity - a question I was happy to successfully refute), they have been catalysts for change. Long may these changes continue, but I still have two concerns.

Some companies in Hong Kong still pay their Non-Executive Directors way below appropriate compensation, given the levels of responsibility they now have to bear. No longer can one be expected to sit on this board or that committee just for the "honour". Appropriate remuneration is now required to compensate for the considerable amount of time-consuming work involved, and which carries severe penalties and "inconvenience" for not doing that work.

 And what inconvenience! A friend of mine sits on a select few Boards. He is conscientious, careful, professional, and the sort of person I would be pleased to share a Boardroom with - but a company with which he was involved ran into some financial difficulties. The next thing he knows is that the Police are all over his home, in his absence. In fact their presence was announced by way of a mobile telephone conversation, from the police, telling him they were in his home. No courtesy, no consideration for the individual. They took away papers - relevant or not. They took away a computer - relevant or not. No questions. No apologies. He was treated with the same level of disdain reserved for a hardened criminal.

The fact is, being a non-executive director today requires careful thought and consideration by the individual concerned. You need to represent the shareholders best interests, and you should be able to bring something useful to the company in addition to good corporate governance - a skill, a knowledge base. Your boardroom should be one that is willing to listen and record deliberations or contributions from the directors, and one that understands that today's non-executive directors are not window- dressing.