Jeremy Warner's Outlook: Hornby gets his hands on the HBOS train set as Crosby bows out with a job well done

Those deficits just keep on growing; ITV interactive goes belly up
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Few FTSE 100 chief executives get to choose the timing of their departure, let alone leave while still young enough to pursue another career, yet James Crosby, CEO of HBOS, appears to be one of them. Despite his relatively youthful 49 years of age, Mr Crosby is the longest standing CEO of a major UK bank, having served a full seven years at the wheel.

That's usually enough for anyone, and regardless of City speculation that he has been eased out perhaps a little sooner than be would have wished by an overly ambitious number two - why Mr Crosby hasn't even yet had the gong - I think he has to be believed when he insists that the decision was entirely his.

One of Mr Crosby's reasons for going is that he didn't want to outstay his welcome, which he has seen too many CEOs do before him. Well, he could safely have assumed a decent welcome for a good few more years yet.

His record at HBOS has been exemplary, having successfully merged Halifax with Bank of Scotland four years ago and completed its transformation from staid old mortgage bank to one of the most successful retail financial services groups in the land, with a bancassurance model to die for.

Along the way, he's managed to vanquish City sceptics who said his strategy of championing the consumer by chipping away at the soft underbelly of established retail banks and savings institutions would do nothing for shareholder value. His record in both cost and capital management has been among the best in the industry, more than paying for the price wars he's unleashed in current accounts, credit cards and much else besides. Just recently, the shares rose to an all-time high.

In this endeavour, Mr Crosby has been hugely assisted by the even more youthful Andy Hornby, regarded by some in the City as the real star behind the HBOS success story, so it seems only natural that Mr Hornby should now move seamlessly into the hot seat.

Mr Hornby's position as anointed heir apparent was well signposted last year, when he was made chief operating officer, and indeed special incentives have had to be put in place in the past to keep him from leaving. He was once offered the top executive job at Boots. Though he denies it, perhaps he did play his hand with the board, for this is a man who from the moment he topped his MBA year at Harvard was plainly destined for the stratosphere.

Mr Hornby claims not to have had any job offers in the past 12 months, but if he had been left in his present position, he could surely have expected them. At just 38, he's even younger than Mr Crosby was when he became chief executive and is possibly the youngest-ever CEO of a major bank. True he doesn't yet beat Simon Wolfson at Next or James Murdoch at BSkyB in the age stakes, but these two arguablyobtained their positions as FTSE 100 CEOs through nepotism.

With Mr Hornby's elevation at HBOS, there will be three FTSE 100 chief executives who come from the Archie Norman school of management. Mr Hornby served under Mr Norman at Asda. Little doubt who drew the best straw there. The other two are Justin King at J Sainsbury and Richard Baker at Boots.

As for Mr Crosby, he's had enough of this CEO lark, but he wouldn't mind being chairman of a major plc. He shouldn't be short of offers.

Those deficits just keep on growing

And you thought that rising equity markets would help close the yawning deficits in many of Britain's occupational pension funds. Not a bit of it, according to new estimates from Mercer Human Resource Consulting. In fact, pension scheme deficits in the FTSE 350, accounting for roughly half of the total deficit in British occupational pension schemes, are projected to have risen by about one-quarter last year to £93bn.

Mercer has calculated the figure on the basis of international accounting standards, which are to be used for the accounts of all UK listed companies as of 31 December, 2005. Calculated on a full buyout, or wind-up, basis, the number would be hugely larger. Slavishly following the investment fashion of our times, most pension funds have been busy swapping their equity assets for bonds, but surely they would have been rescued to some degree by the rise in stock markets?

The answer is that they have, but that the effect has been more than cancelled out by falling interest rates, which have made future liabilities more expensive to fund, and increased longevity, which again has significantly increased the cost of providing the promised pension in retirement. The rising value of the assets has been unable to keep up with the rising costs of providing the pensions.

Philip Green and the Co-op have drawn condemnation in the past week for attempting to reform their pension arrangements so as to limit their spiralling costs, but in fact they are only in the vanguard of a process which all companies with occupational pension schemes will eventually have to confront.

The situation is much graver at many other companies. Rentokil Initial has already taken the nuclear option by closing the fund, not just to new members, but to all further accruals.

The situation at British Airways, which has the largest deficit as a proportion of market capitalisation in the FTSE 100, might seem to demand similar action, for left unaddressed it will render the airline increasingly uncompetitive.

The new breed of low-cost operators have no pension liabilities at all to fund, while US airlines are being allowed through Chapter 11 bankruptcy procedures to dump their liabilities on the US government-backed Pension Benefit Guarantee Corporation. Willie Walsh, the new BA chief executive, has already warned staff they face either higher contributions, reduced benefits, or both.

All companies with occupational pension schemes are being asked by the new pensions regulator to close their deficits within 10 years. Nothing is more guaranteed to hasten the demise of the final-salary pension scheme. Within 30 years, they'll be almost entirely gone, with the investment and annuity risk of pension provision born exclusively by the employee. If there weren't already reason enough for employers to give up on occupational pensions, well intentioned but misguided regulation has delivered the final coup de grace.

ITV interactive goes belly up

One of the ways in which ITV plans to counter the relentless decline of its core ITV1 franchise is through the development of interactive revenues. The fiasco of its relationship with Sportech doesn't give much reason for optimism. Amid bitter recriminations on both sides, the contract to provide ITV with a fixed-odds betting service was yesterday cancelled at a cost to Sportech of £14m in write-offs and redundancy payments.

ITV thought the service just no good, while Sportech insisted the problem lay with lack of promotion, which meant few knew it was there to use. Whatever the truth, the £4,000 a week the venture was generating in net revenues was pathetically small, and certainly gives little reason to believe ITV can ever meet heroically ambitious targets for interactive revenue growth.

Charles Allen's apparently miraculous ability to win concessions from the regulators - first on the creation of a single ITV, then on licence fees and public service broadcasting obligations - has gone some way to redeeming the ITV chief executive's reputation in the City after the fiasco of ITV Digital. He's at it again, lobbying regulators for release from "contract rights renewal", the obligation to reduce charges to advertisers in line with ITV's fall in audiences imposed on him as a condition for allowing the creation of a single ITV.

Yet his ability to deliver decent levels of top line growth remains as questionable as ever. As things stand, Mr Allen appears to be fighting a losing battle to replace lost revenue from ITV1, as TV audiences fragment, with new revenues from digital channels and interactive services.