Archive for Business

Popularism for the sake of it

There is little doubt that many bankers lost the plot completely and it still appears many haven’t yet bothered to take on board the lesson, but that doesn’t excuse populist policies by politicians to pander to the masses, particularly when the policies are irrelevant.

Popularism for the sake of it

Popularism for the sake of it

Splitting the banks; Protecting the safe banks; Cutting loose the ‘casino banks’; too big to fail  etc. All meaningless phrases but stirring up jingoistic positive emotions.

If we look at the so called safe banks – Northern Rock – the straw that broke the camels back in the UK. Not a bank too big to fail and not an investment bank, but a major mortgage lender Fannie Mae and Freddie Mac which broke the back of the American banking system, both mortgage lenders. These institutions, in a similar vein to all mortgage lenders were in a market of easy credit and high demand fuelled by sharply rising house prices, which led them to take ever greater risks in lending.

To enable them to continue with their rapidly extending loan books and retain a balance sheet to enable them to loan out more mortgages, the mortgage lenders borrowed from other banks by using as assets these mortgage loans. The Investment Banks, then bundled the loans together and sold those on. The various instruments used by the Investment Banks relied on knowing what was inside this bundle of debt and rather than picking out each loan individually themselves looked to the Ratings agencies to risk assess the loans.

Once people started to default on their mortgages the original lenders no longer had the income stream to payback their debts to their creditors  and immediately the Investment Banks started to question the real value of these bundles, whilst at the same time not receiving income from the ‘safe banks’ they had lent to in the first place. It transpired that the Ratings Agencies had been lax in assessing the risk of these bundles and the whole house fell down.

If people want to point a finger – it is at anyone who defaulted on their mortgage, the secondary fault lies with the ‘safe banks’ who not only made the original loans but then chased more capital by using these as assets, the third line is the Ratings Agencies who didn’t do their job. The ‘Casino banks‘ are four steps away from the reason for the collapse.

But let us move away from the facts behind the collapse and work with the faulty premise.

Investment Banks provide the capital to make the world of socio-capitalism work, without them there is no lending, raising of capital, currency risk management, futures pricing etc. and this fantasy world of socio-capitalism, which relies on credit will collapse in a heap as the only ability to trade will be through cash in hand.

Personal Banking – the safe banks – is but a part of, not apart from, the capital markets and for anyone to posit allowing Investment Banks to collapse at a whim in the future is the solution, is either deluded or a politician pandering to Popularism for the sake of it, as it simply will not happen.

Join Tim Whale on twitter for more thoughts from the outside.


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Economical with the actualité

Lying has become such an endemic strategy in British Politics, Business and Policing that it is little surprise the general public is dismissive.

Edmund Burke

Edmund Burke

Back in 18th Century Edmund Burke – who as an MP in the the House of Commons for The Whigs came up with the euphemism for lying with his summation – ‘Falsehood and delusion are allowed in no case whatsoever: But, as in the exercise of all the virtues, there is an economy of truth.’ Burke is viewed as the philosophical founder of modern Conservatism. Politicians of all sections have learnt the lesson well.

In 1986 another politician –  A former Cabinet Minister – Robert Armstrong – brought it in to common parlance, whilst giving evidence during the Australian spycatcher trial in 1986.

Lawyer: What is the difference between a misleading impression and a lie?
Armstrong: A lie is a straight untruth.
Lawyer: What is a misleading impression – a sort of bent untruth?
Armstrong: As one person said, it is perhaps being “economical with the truth”.

In 1992 yet another politician – Alan Clark tried to make it all seem so noble an art for politicians to master when at the Matrix Churchill trial he exchanged under questioning -

Clark: Well it’s our old friend “being economical”, isn’t it?
Lawyer: With the truth?
Clark: With the actualité

This paroxysm of lying is now an inbred part of the culture of politicians in the UK that no-one sees it is a surprise. But it needn’t be the case and it is time the British Public and Media took Politicians to task for consistent lies rather than smile sweetly as with a naughty toddler.

Sadly this virus has spread wider than politicians and it is not a unusual site to look around a jury and find half the members stifling a laugh when a Policeman takes to the stand and takes a look at their black notebook – proclaiming – ‘this is what I observed at the time’.

This spiral of lies and deceit has subsequently found Bankers, Retailers, Manufacturers etc. deciding to join in the band wagon. That little bit of ‘bending the truth’ runs rife through the UK and is not acceptable and those in positions of influence must be called to account.

It is why Politicians think fiddling expenses is a fine and dandy thing to do. It is why none of these Police Officers –  who can be clearly seen looking directly at the assault – actually saw anything of Harwood pushing and murdering Ian Tomlinson -

The murder of Ian Tomlinson

The murder of Ian Tomlinson

It is why staff at agencies such as A4E and G4S sign contracts they have no intention of fulfilling and seeking to find mechanisms to secure payment with little come-back, on occasion resorting to outright fraud – for which no-one is ever made accountable.

It is why Blair continues to fly around the world lecturing on moral probity when the September 2002 document in which his introduction advised – The document discloses that his military planning allows for some of the WMD to be ready within 45 minutes of an order to use them. -

Not only was the document proven to be wrong but his introduction an outright lie.


This comical and sweet sounding term –  Economical with the actualité – is a pernicious and dangerous festering sore that needs to be stamped out.



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Ed Vaizey and the lost plot

It is of little surprise that  have such scant regard for politicians as they far too often loose the the plot.

Ed Vaizey

Ed Vaizey

Ed Vaizey,  Minister of The Department of Communication, Culture and the Creative Industries, is the latest in a long line.

He has been responsible for having a look at the way ISPs operate and provide access to the internet and has concluded that the UK should be lightly regulated and ISPs be able to offer internet access using different charging methods for access to various parts of the internet.

Regardless of where anyone stands on the aspect of two tier internet access, Ed Vaizey really seems to have no idea of what he is proposing, alternatively he is so contemptuous of the general publ;ic that he thinks they are too thick to understand.

Net neutrality, held up by most, as the way the internet should continue to develop, whereby in brief means, once you have accessed the internet you should be freely able to access whatever URLs you wish. If the site owner wants to place charges, registration or whatever once you have reached their site, that is for the site owner to decide.

Ed Vaizey is proposing that ISPs will be able to charge a premium for subscribers to access certain sites, maybe blocking them completely without the additional subscription, or to slow down their access speed to reach those sites. The complete opposite of net- neutrality.

Mr. Vaizey is trying to claim that his vision of ISPs charging and throttling at will is net-neutrality and that we the unwashed public and experts in the internet including by the way Tim Berners-Lee that they don’t know what they are talking about.

It will be of no surprise that I am an advocate of net-neutrality and I make no bones of that, but for Vaizey to try to claim that his vision is in anyway related to net-neutrality is so far off the scale of intelligent thought that it is worrying.

It is hardly of any surprise that he is a Minister in The ConDemned Coalition and his pronouncement is a further example of the Con in this coalition, which pronounces lies as facts and failure to understand on their behalf as stupidity by the rest of the world.

Vaizey goes on to claim that in the UK there is a wide range of ISPs available and people are free to switch at a whim if they don’t like what their ISP is doing. Perhaps he is too far removed from reality to understand that when you sign up with an ISP you sign up for a contract period which ranges from 12 months to 2 years. Not exactly free to switch at a whim.

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Moving Windmills

Real inspiration and innovation isn’t driven by generating large profits as the story of William Kamkwamba demonstrates all too clearly.

The absolute drive to find a solution is a superb model it would be good to see applied more frequently in the UK.

We have quangos, development agencies, politicians, relief funds and who knows what else aiming to create ever more complex solutions to simple questions.

William took an old book and changed his life and that of his family and village. Not through massive infrastructure projects, but by identifying a need and developing a solution.

While I am sure many people involved in regeneration projects are keen to provide solutions, it does often appear as though many of those solutions come from blue sky thinking and are not driven from bottom up planning.

If there was less pontification and more conversation with those facing problems, then practical faster solutions may well be forthcoming.

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Music Distribution

I understand the concerns musicians have regarding distribution far and wide across the internet and their feeling aggrieved at loss of revenue, but the time has come for these musicians to recognize not only the negative impact of major record labels old fashioned methods of distribution, but also recognize the value of that wider distribution.

Sea of Sound
Image by fensterbme via Flickr

The recent payment by google to the PRS for videos on YouTube, is but one part of the equation. Now that the PRS are happy with their settlement, google will push their advertising much harder, as they too need to recover costs.

They will also be ever keener to have blogs and websites embed these videos, which is great for the Musicians, great for the Record labels,great for google, but for the blogs? Who is actually paying their hosting costs? Where is the payment from the record industry to the websites across the world who legally market and make available those self sameYouTube videos which will earn the upper tiers money, but actually cost the end distributor money?

The record companies and musicians are also keen to have websites utilise paid for downloads, very nice too, using the likes of itunes et al. itunes themselves in turn offer affiliate programmes to encourage third party websites to promote their product. That is a good thing as at least the end distributor is making some return, if they are able to sell downloads from their websites. But it is itunes who are taking the hit, not the end musician.

The major record labels still want to control the whole package from band ownership to point of sale, including offering their artists ‘distribution’ as part of the package. It is time the major labels gave up trying to control distribution, it is not in the interest of the musician or the end consumer that they still attempt to control this distribution.

Whilst the major labels are happy to negotiate with itunes over revenue sharing, they are not prepared to do so with a.n other blog and this is so out of step with the current world and automation, as to be ridiculous.

There is no reason the major labels can’t set up their own affiliate programmes, permitting the end distributor to make music available legally on their website and be paid directly for what they sell and pay directly for any premium material they wish to display, withoutitunes etc. taking a cut, or google not passing on any revenue. This would enable a fairer system both for the musician and for the listener, not to mention the actual distributor.

The major labels owe it to the musicians they manage to optimise revenue and distribution opportunities. By concentrating purely on deals with large companies, they are ultimately failing their clients.

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Dear Gordon we the banks expect

Dear Gordon

you recall there was a little bit of a problem with that Building Society a while back that turned out to be worse than we all imagined.

Northern Rock

Northern Rock

Then you remember how you saved the world by using money you didn’t have to invest in us with that clever idea that you would then borrow that money on the open market, so we could lend you the money that you lent us, but only after we pretended we wouldn’t, so that the interest payable on the money you were after was higher than it would have been if you hadn’t lent us the money you didn’t have in the first place.

We then agreed to let some of our best people go on the pretext of incompetence, so long as they had handsome pay-offs.

Fred Goodwin

Fred Goodwin

But your team forgot about the Freedom of Information Act and all that pensions and payoff stuff came out and it made us furious, to the point that we stopped lending any money to anybody unless you came up with a better solution.

Then we had the wheeze of the pixie dust money we called quantitative easing, which was going to generate lots of money, so we could then lend out the money that you owed us that didn’t exist in the first place that we had lent back to you.

We agreed at the time that your lot would get rid of the FSA, but get them to come up with a ‘regulatory regime’ which would only last until they were disbanded and set up a new regulator.  We also talked about how by blaming other international regulators for not being as tough as you, then we could actually forget all about regulations and bonus rules.

We managed to trounce that idea of dividing our retail banking business from our investment banking business, but it was a close call and no thanks to that man Cable, who you told us you would get on-side with a cushty job, what happened there?

Vince Cable

Vince Cable

Now because we are still coming up with triple A rated piles of scrap-paper and are once again generating possible money using the superbly crafted auditing regulations, which we are not prepared to negotiate over, we are prepared to offer you some more help, but only if you are prepared to help us out of another couple of problems.

The most important being that some people actually believed the bit about us having reduced bonuses.

This is absolutely unfair. Because we have been able to make money out of our idea of Quantitative Easing which helped you, let’s be honest, in not loosing your job in May, we want to take out some real money in the form of bonuses before the whole pile comes crashing down.

Our second problem is that your investors (tax-payers), who need the loans because of the money you gave us, well they are still moaning about the fact that while BoE interest rates are only 0.5% we are charging them an enormous spread.

I think it is time you made sure that BoE interest rates rose and we demand to see that within the next 3 months. Your chaps can handle that I am sure.

In return, we will pay you back a little bit of money before the General Election and we will lend out a little more money to your investors.

In return we expect you to announce that you need to borrow some more money from us, but I think your phrase of Government Bonds is much smarter sounding. I know your boys are pretty good on the PR front and can spin this line pretty well.

Don’t worry about the Tories, we have them under control with their directorships, its your lot who are causing the trouble here and you need to remind them, they need us either to keep their seats, or to provide them with jobs next year.

Gordon, none of us are getting any younger and time is pressing and we have pensions to sort out later, so it is important that you get these things done in the next couple of months.

Oh and one more thing. If it all goes wrong and you need a job after the election, we are always here, well for the time-being anyway.


We want our bonuses banking association

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Saving time and killing people

Once again the safety of ferry passengers plays second fiddle to saving time, on this occasion one person was crushed between the water tight doors of a Ferry sailing from Ostend to Ramsgate.

The Marine Accident Investigation Board  published its findings on today after an incident on November 3rd 2008, during which a  fitter was crushed in a steel watertight door.

The accident happened on board Transeuropa Ferries’ Eurovoyager as it came into Ramsgate harbour.

The report revealed that watertight doors were routinely left open on the Eurovoyager as it sailed across the Channel.

Herald of Free Enterprise

Herald of Free Enterprise

The actions of some of those involved in the Cross Channel Ferry industry are unconscionable.

In March 1987, 193 people were killed, due to water entering the vehicle area of the Herald of Free Enterprise causing it to capsize, the report into the accident highlighted the importance of the watertight doors, in addition to recommending changes to ferry design.

‘…If substantial quantities of water reach the bulkhead deck, such a ferry may become totally unstable. The disaster to the HERALD was certainly unusual and it is to be hoped will never recur. Nevertheless, leaving the bow doors open is only one of several ways by which water in quantity may
gain access to the bulkhead deck….’

‘…The superstructure must have doors to allow access for the vehicles and these are usually, but not always, at the ends. Obviously the doors have to be weathertight when closed, to ensure the buoyancy of the superstructure….’

Twenty one years later little seems to have changed, with Ferry operators continuing to take short cuts for time expediency.

It appears that someone on-board this ferry at least, knew that the watertight doors should be closed, as the MAIB report into the Eurovoyager states:

‘…It was the usual practice on board for the watertight doors to be in local control. However, VDR data showed that many of the doors were routinely left open at sea, which potentially compromised the vessel’s watertight integrity. Remote control had been selected on this occasion to ensure that the doors remained closed while a Belgium Maritime Inspector was on board conducting an EU ferry inspection….’

Because a marine inspector was on-board, the doors were automatically closed, this leads to a natural conclusion, that although those on-board knew the doors should be closed, they really couldn’t be bothered and because not closing the doors was so routine, the only way to ensure the Inspector would be satistied, would be to make them close automatically.

Immediately after the incident, Transeuropa Ferries sent a circular reminding crew of correct safety procedures and ordering staff to keep watertight doors closed while at sea.

An on board training manual has been updated and all watertight doors now close in line with SOLAS requirements.

To use a poor analogy, sounds a little like shutting the door after the horse has bolted.

A flyer has also been sent out by the MAIB to the shipping industry, reminding them of what they should be doing routinely, including a further reminder of closing watertight doors.

‘…A Belgian Maritime Inspectorate surveyor was on board carrying out an in-service inspection. Although it was the on-board practice to keep the watertight doors in ‘local’ control when at sea, the master switched the doors to the ‘remote’ or ‘doors closed’ mode when leaving Ostend to ensure that none could be left open during the inspection. The master informed the crew of this action….’

‘…The decision to place the watertight doors in ‘remote’ mode was influenced by the crew’s lack of discipline in closing the doors when at sea. The sinking of the Greek ferry, Express Samina, with the loss of 82 lives, clearly shows why watertight doors must be closed at sea. Every effort must be made to ensure this is achieved….’

As a more sober reminder to those who decide the short cut is a good idea, we should see criminal charges brought against these people who endanger lives, because they, can’t be bothered.

The video below is a pertinent reminder of the reality of The Herald of Free Enterprise disaster.

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RBS – we need bonuses – we need them now

RBS courtesy of

RBS courtesy

The RBS Board appear to have learnt nothing and are keen to review their perks once again.

In early May RBS reported a loss of £895 million for the first quarter, which compares to a profit of £245 million a year earlier.

Last year the bank managed a loss of £24.1 billion and has an estimated £325 billion of exposed potential uncovered debt, more prosaically termed toxic debt so it doesn’t sound quite so dire. This is being transferred to yet another tax payer bailout, with RBS being liable for £19.5 billion of the debt and paying an insurance premium for £6.5 billion for the risk, bearing in mind the tax payers own 70% of RBS, we the tax payer are in effect paying another set of bureaucrats to insure against a risk, we the tax payer are already covering, money for old rope if you can find a spot in the Quango.

This is the Bank that managed to pay off their former Chief Executive Sir Fred Goodwin a pension amounting to £16 million and is set to pay Gordon Pell, the last remaining executive still on the board from the Goodwin era, a pension worth £9.8 million, when he retires next year.

Looking forward

But it all gets better for the future of RBS Executives though sadly, not for the tax payers who bailed out the bank.

The tax payers will be injecting another £13 billion in to RBS, in addition to the £20 billion already paid to strengthen the balance sheet, with a further £6 billion on stand by.

The Bank is undertaking a restructure and there are resulting board changes.

Stephen Hester CEO RBS

Stephen Hester CEO RBS

In essence the suggestion by Stephen Hester, Chief Executive is that the bank would be separated into two arms, with the bank’s riskier assets and operations grouped together.

Without going in to the finer details, the headlines are:

Gordon Pell, head of Retail Banking is being replaced by Brian Hartzer, from ANZ. Mr Hartzer, who is not an Executive Board Member, so his remuneration package has not been disclosed, is expected to be paid a £3 million pound handshake,

Chris Sullivan, currently head of the bank’s insurance business, is going to head up Corporate Banking, taking over from Alan Dickinson, who is being moved to Chairman Corporate Banking until he retires next year. His pay off is unknown as he is not a Board Executive.

Brian Stevenson, who runs the group’s global transaction services division will report to Mr Sullivan.

Nathan Bostock will join the lender from Abbey National on June 1 as its news head of risk and restructuring.

Paul Geddes, who currently runs UK retail and reports to Mr Pell, will run the insurance division and become a member of the executive board.

Guy Whittaker, the finance director, is being replaced by October and it is expected he will receive a share award.

It has come to light that several senior bankers at RBS are being paid guaranteed bonuses, this flies in the face of Government Policy and any morally acceptable position. The current FSA rules at present clearly state that the bank must be able to claw back bonuses in the event of poor performance and there must be no rewards for failure. A guaranteed bonus cannot be clawed back.

The argument, few months on from the supposed ‘change of culture’ and wringing of hands of course being, that the best people need to be retained and incentivised, so these rules which sounded good when the situation was daily news, just shouldn’t apply now as we can probably get away with it, as the focus is on MP sleaze and upcoming elections.

I just wonder how many people could do worse than a £895 million loss for the first quarter and if this is the best, are the ‘best’ worth the money?

This becomes more apposite when Stephen Hester said of the results and the likely time scale of RBS returning to profit:

‘…It’s not really in our hands, it’s in the hands of the economy and what it does to our loan books,…’

If it isn’t in the hands of the Executives and it is all down to a bit of luck and wind in the right direction, why pay the executives anything?

Philip Hampron Chairman RBS

Philip Hampton Chairman RBS

But it gets better yet; please step forward Sir Philip Hampton, the Chairman of RBS. It transpires he is in talks with the Government about a new incentive scheme for Executive Bonuses, which are expected to net senior staff awards running into millions of pounds. Once again the argument being, this is how the best people will be recruited and retained. The best people to run a business that is: ‘not really in our hands’.

The proposals focus on how these poor beleaguered bankers can be awarded a bonus when the market is so volatile, with the suggestion being there should be some complex measurement of performance against banking sector peers and FTSE 100 companies. Hardly a fair measure, when this is a business that can’t fail, whilst most of the other businesses in the FTSE 100 do not have Government subsidies running to the tune of £ billions and are in sectors or markets which can fail.

These negotiations will only cover this financial period, the period in which the prospects are ‘not really in our hands’ as the FSA are looking at a new set of rules for the coming future.

RBS has learnt nothing and the moral decay continues.

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Saving up for retirement, try the new ‘Cock-up’ Pension Plan

The Government are keen to ensure everyone has a pension pot to draw down from once they reach retirement and the aim is to drive people to save towards those pensions. New pension legislation will require employers to opt people into pension schemes, though these plans are under some criticism as smaller employers will be required to spend an inordinate amount of time in pension scheme administration.

With the recent collapse in equity markets, many people have found their pension pot slashed by 30% leading many to question the stability of private pensions.

There is a much easier way to ensure a decent pension. It does require dedication and hard work, but like all good pension schemes, will enable you to retire earlier than you may have anticipated and you may even find yourself receiving a larger than expected pension, when it comes to draw down.

For some reason the Government and pension brokers are not pushing the new ‘Cock-up’ pension plan.

The scheme requires you do achieve a level of authority in an organisation. A level senior enough that when you wish to draw your pension, you are able to make such a significant cock-up, that your suggestion of retirement is a welcome relief to those around you.

According to the National Statistics Office

The average employee in private sector defined benefit occupational pension schemes contributed 4.9 per cent of salary to their pension in 2007, compared with 2.7 per cent for employees in defined contribution schemes.

In 2007, the average employer contribution rate for private sector defined benefit schemes was 15.6 per cent of salary, compared with 6.5 per cent for defined contribution schemes.

If instead of investing at the full rate of 15.6%, to achieve the ‘cock-up’ pension you are advised to invest part of this money in ongoing education, you will then be better be placed to achieve higher office in your organisation and the higher the post held, the better the payout.

How does the ‘cock-up’ pension work?

Fred Goodwin

Fred Goodwin

Let us take as an example. Sir Fred Goodwin, the former head of RBS.

Had he tried to purchase his pension on the open market at the age of 50, with index linking and widows benefit it would have required a pension pot of £30 000 000.

His salary including bonuses was £4.2 million a year.

Using the average yardsticks this would have amounted to an employee and employer contribution of about £900 000 in the year. To build up this pot would have taken just over 30 years to amass (excluding investment growth), assuming average earnings over that time of £4.2 million a year.

Lets try another example.

Bob Quick

Bob Quick

Bob Quick, former Assistant Commissioner, who recently retired after wandering around with security documents on full view. He has been pushing his luck for a little while, well actually since he achieved 30 years service in the Police Force.

He was forced to make 3 public apologies in three months. Initially accusing the Conservative party of a smear campaign and following up with his exposure of secret documents.

Mr. Quick joined the Police force in 1978 and was forced to retire 31 years later at the age of 49 with a guaranteed pension of £114,000 a year, or a £520,000 lump sum and £85,000 a year.

Rules on police pensions, to which officers contribute 11 per cent of salary, provide payouts of two-thirds of final salary for those who have served 30 years.

Apart from salary increases Mr. Quick had little more benefit to gain from his pension. At the age of 49, he is comfortably set up with his pension and at the age of 49, has plenty of time to pursue a new career.

Had either of these characters not achieved high profile offices, then the likely effect of their actions would have been instant dismissal and although pension entitlements would have still been earned.

In the case of Mr. Goodwin, there is little doubt his final pension would have been considerably lower and in the case of Mr. Quick being fired from the police service, is not a good reference to start out on a new career.

I really think the Government and pension brokers need to push the ‘Cock-up’ pension plan more robustly as the substantial benefits to be gained using this method of pension provision would have tremendous benefits in reducing the reliance many of our current pensioners and future pensioners have on state support.

Further emphasis on ongoing training, which sits well with the Government mantra of higher education for all, reduced state funding of pensioners and happier pensioners who can afford to retire in their late 40’s and early 50’s, must be a win-win.

Oh dear, just one problem with the plan. It is the taxpayer who has to support these ‘Cock-up’ pension plans. Never mind as a pensioner you will be laughing your way to the bank (what is left of them).

On behalf of tax-payers, back to the drawing board.

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Inside the murky house of Aviva

Aviva PLC, who describe their strategy as:


Our purpose is to bring prosperity and peace of mind to our customers.

We will do this by realising our vision: One Aviva, twice the value.

By working together across our businesses, we will optimise our performance in the global marketplace and maximise the value we can generate for all our stakeholders….’

Have a strange way of reflecting this ‘peace of mind’.

While many people around the world decry the bonus culture and perceived greed of the City Bonus culture. Aviva, seem to feel they are all too far above this, for it to matter.

Andrew Moss CEO Aviva

Andrew Moss CEO Aviva

Andrew Moss Chief Executive Officer of Aviva saw the business plunge in to the red last year:

Moss has led this company whilst, Aviva shares have fallen by 60% in the past year, profits for 2008 and has managed to run the business at a loss. The business has dropped from pre-tax profits of £1.8 billion to losses of £2.4 billion. Anyone of a reasonable nature would see this as a catastrophic failure. £2.4 billion loss. However not dear old Andrew Moss and the Board of Aviva, who actually see this as a good thing and feel that the man deserves not only a pay rise, but also a bonus.

To his credit he is talking of foregoing his pay rise, however the bonus for last year was: £752,000, one-third in cash and two-thirds in shares. He also got £463,000 in Aviva’s long-term savings scheme.

He portrays this failure as some sort of marvellous stamp of approval on his track record and gleefully announces dividends will not be cut

In a tumultuous year, our underlying business has shown great resilience … Operating profits are up and we have maintained our dividend. Bottom line earnings have been affected by investment markets, which have predictably created significant unrealized losses during the year.

He should be sacked not rewarded.

While I take a look at Aviva, it would be interesting to get a perspective on this urgently needed operating business name change from Norwich Union, to Aviva. The exact costs of this rebrand are not yet fully disclosed, but are known to run in to hundreds of millions of pounds.

Supposedly this is all about cost efficiency and more importantly to quote the strategic aim of the business ‘we will optimise our performance in the global marketplace and maximise the value we can generate for all our stakeholders’

Andrew Moss in 2008 had this to say of the rebranding: ‘…did not expect the name change to hit sales….’

Well excuse me for being a bit thick here. Not expecting the name change to hit sales is hardly a compelling business rationale to spend hundreds of millions of pounds. He didn’t say, this will increase sales, or even this will ensure maintaining market share, no he said quite clearly he didn’t expect the name change to hit sales.

So how is the rebranding being paid for?

According to the FAQ page on the Aviva website about the name change:

Q. Will my premium go up to pay for this?


Q. How much will this cost?

The cost of rebranding will be more than outweighed by the cost-efficiencies achieved by supporting one brand rather than several.

A bland response, but one to work with, but it does somewhat counter a comment Moss made in 2008 when he announced the rebranding programme: Although he declined to comment on the cost of the rebrand he did say the group was ready to make a ‘significant investment’, an interesting juxtaposition.

Moss acknowledges this rebrand will require a ‘significant investment’ and hedges on the question of future sales by saying it shouldn’t have a negative impact. So why did Aviva go for the name change?

Amanda MacKenzie Group Marketing Director Aviva

Amanda MacKenzie Group Marketing Director Aviva

Step forward Amanda Mackenzie Aviva Group Marketing Director, who joined the group in 2008. Was the rebrand created to entice her from Centrica?

Mackenzie is well known for her rebrands of corporates and she specializes in expensive changes. She worked at BT when it changed its logo from a piper to a globe and helped Mars when it changed Marathon to Snickers and Opal Fruits to Starburst.

Amazingly enough, even she doesn’t really believe in this rebrand stating:

‘…We have got to be open-minded enough to say: Well, maybe we will keep a little bit of the comfort blanket of the old brand for a little bit longer, if people need it…’

We have the bizarre situation that the CEO is not sure if sales will drop, but knows this is going to cost a great deal of money and a Marketing Director who really doesn’t think it is a great idea, as she acknowledges the old brand names need to be kept round a little longer.

Then to compound it further, the ‘global name’ is not really a good idea after all, as the Aviva FAQ reminds readers:

Q. Are there any businesses in the Aviva group which will not move to the global brand?

  • RAC
  • Delta Lloyd
  • Navigator

You can sort of run with the excuse that the RAC is vehicle breakdown and not insurance related, sort of.

You can’t run with Delta Lloyd who are clearly involved in the insurance business, based in Holland.

Navigator is again clearly an insurance business. If you take a look at their Australian website, it appears that Navigator Australia haven’t been told they are not part of the rebranding programme, the Singapore website looks as confused.

What has been the outcome of the rebrand so far?

Have staff fared well? 1,100 job cuts in the UK announced so far have not been well received. The job cuts may well be unrelated to the rebrand, but do focus the mind on how much the rebrand is costing.

Have policy holders fared well? The NULAP pension investors found there was no annual bonus on their with profits investments.

Have shareholders fared well? Despite massive losses, the dividend has been held.

Have directors fared well? Moss received a handsome bonus.

There has been no sound business case made for this rebrand, with the Championing Directors having public doubts.

Yet, despite all this, the Directors of Aviva, feel they have done sufficiently well in managing a loss of £2.4 billion, to award themselves bonuses.

Aviva PLC and Andrew Moss in particular is a fine example of moral turpitude in the UK. This man should resign as he has turned a profitable business into a loss maker. He wants the credit if it goes well; he needs to accept responsibility now that he has been seen to fail to catastrophically.

What level of loss does the Aviva Board deem unacceptable? An RBS scale failure?

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