COMMENT: Hambros dirty linen should see light of day

`Only Hambros, the Bank of England, the Securities and Futures Authority and Norton Rose themselves know the full story leading up to yesterday's unsatisfactory public execution of line soldiers'

If Sir Chips Keswick, chief executive of Hambros, believes he can now draw a line under his bank's involvement in the Co-op affair, he is as sadly misguided as when he rashly backed Andrew Regan in the first place. The non-publication yesterday of the Norton Rose report is about the most unsatisfactory outcome imaginable for the struggling bank.

After a truly extraordinary display of obfuscation by all sides yesterday, it finally emerged that Hambros is unable, for legal reasons, to hang out its dirty linen and have done with it. By design or otherwise, the Norton Rose inquiry was conducted under the terms of an obscure section of the Banking Act which ensures its contents must remain under wraps. Section 39, for those frivolous souls who haven't committed the Banking Act to memory, allows the Old Lady to override client confidentiality in its search for the truth about a bank's systems and controls. Once an investigation is conducted under this arcane provision, no-one, it seems, is allowed to say anything at all about its findings.

Which leaves us all boxing in the dark, as usual. Only Hambros, the Bank of England, the Securities and Futures Authority and Norton Rose themselves know the full story leading up to yesterday's unsatisfactory public execution of line soldiers. It is not possible to tell from Hambros' brief announcement either whether this is sufficient retribution, or even if it is just. The beautifully decorated generals in the boardroom must decide for themselves whether they have behaved honourably.

Clients of Hambros are meanwhile left wondering whether it is worth sticking with a corporate finance division that was so desperate to enhance its presence and improve its returns that it backed a wrong `un and stuck with him well after it should have walked briskly away.

The SFA and the Bank of England will be taking a close look at the exact sequence of events during that hectic week in April when the full truth about Mr Regan's tilt at the Co-op emerged. First they will want to know, as we all do, what Sir Chips Keswick and Lord Hambro knew and when they knew it. As always in these affairs, the next question has to be if they didn't know, why didn't they know? For a manager it is hard to know which is the worse sin - knowing, or the negligence of not knowing. Failure to give a full and explicit answer to these questions may ultimately prove more damaging to the bank than the embarrassment of the affair itself.