Mike Ross, chief executive of Scottish Widows, did an amazing deal by his policyholders when he sold the Edinburgh stalwart to Lloyds TSB for £7.3bn three years ago. But in the process, he pretty much shafted the shareholders of Lloyds TSB, for whom Widows has been a millstone ever since.
It's not just that with spectacularly poor timing, Lloyds TSB bought the life assurer just before the entire industry went into meltdown, or even that Widows has been eating capital ever since. It is also that the whole bancassurance model, the primary justification for the merger, has simply failed to work.
Widows has always been strong with independent financial advisers. The Lloyds TSB branch network was meant to give the company a whole new distribution channel to sell through. Yet the reality is that Widows has been losing market share, losing brand image and, indeed, losing its way.
Time for a rethink. When Eric Daniels took over as the Lloyds TSB chief executive earlier this year, his first inclination was to sell it, but after a couple of tries, it soon became apparent that his was a rather different view of Widows' value than any potential purchaser was likely to have. So now he's trying to make a go of the business instead.
Mr Ross, a Scottish Widows lifer with 40 years of loyal service under his belt, was seen as a barrier to the closer integration with the branch network Mr Daniels thinks the solution. So off goes Mr Ross, whose position on the Lloyds TSB board always did look inappropriate given how much he'd done to damage shareholder value with his triumphal sale. Whether Mr Daniels can succeed is another thing. Depolarisation, allowing banks to sell a range of different investment products, further undermines the logic of owning a life assurer outright. For better or worse, Mr Daniels is stuck with it.
A week after the story first broke, BSkyB finally and formally confirmed yesterday that Tony Ball has decided to quit as chief executive. Rupert Murdoch, the chairman, thanked Mr Ball for his sterling work at Sky and Mr Ball thanked Mr Murdoch for giving him so "many happy memories". Sweet. As to clues about why Mr Ball is leaving, there was nothing.
Mr Ball is apparently in line for at least a one-year pay-off, and possibly two, which would entitle him to a gob-smacking £5m. To ordinary mortals, that might seem to indicate he's been fired, but in the topsy turvy world of executive remuneration, where the chief executive will invariable receive a payoff even if he decides to go voluntarily, it means nothing of the sort.
Nor was there any news in the Stock Exchange statement of Mr Ball's successor, despite the fact that everyone knows it is to be Mr Murdoch's son, James.
Instead, the BSkyB board is to go through the charade of initiating a search process under the guiding hand of the chairman of the nominations committee, Lord St John of Fawsley, better known as the former Tory arts minister, Norman St John-Stevas. Lord Stevas' Who's Who entry lists "sleeping" as one of his primary recreations, so he won't want to spend much time on the exercise, nor will he need to when the obvious candidate for the job is already sitting on his own doorstep in the shape of the chairman's son.
The Association of British Insurers has apparently instructed non-executives to do the succession by the book. Due process will be followed and eventually they will settle on James anyway. I've been unable to find any significant opposition to James' appointment in the City, despite his young age. Some see it as a positive advantage that he is his father's son. If he's anything like his father, then he's plainly an executive worth backing. Nor actually is there much support for the idea that Mr Murdoch senior should be obliged to give up the chairmanship as a quid pro quo.
Mr Murdoch is many things, but crook he is not, having survived a long and at times precarious business career without taint of financial scandal. The idea that he would do something as crude as using his family position on the board to siphon off funds for use elsewhere in the empire is fanciful. Sky is already run according to the needs of Mr Murdoch's wider business agenda. Investors know that when they buy into the stock. In any case, there is no evidence of a Murdoch factor discount in the share price. Until he screws up, Mr Murdoch's plans for the company have to be taken on trust.
That said, Sky is plainly entering a new phase in its development. The switch to digital, and the enormous investment that has entailed, is largely complete. What now beyond the mundane of tinkering with the channels and further growing the subscriber base? It seems unlikely that a businessman as driven as Mr Murdoch would content himself with simply paying back the cash to shareholders.
One possibility would be to revive the idea of Sky Global, which would bring all the News Corp satellite interests, from BSkyB to Direct TV in the US and Star TV in the Far East together under a single global brand. Now that really would test the independence of the BSkyB non-executives. Wake-up Lord St John. You may be needed after all.
The gnomes of Zurich generally know a good thing when they see it, and for Swiss International Airways co-habiting with British Airways always looked a better proposition than being consumed by Lufthansa.
Swiss Air was the first airline to go belly up after 11 September and, now reincarnated as Swiss, it does not want to disappear again quite yet. Membership of the BA-led Oneworld alliance gives it access to a network spanning 560 cities in 136 countries, and more club lounges than you can shake a stick at, or perhaps a cuckoo clock. The entry fee is the surrender of 112 weekly take-off and landing slots at Heathrow, for which BA is stumping up a modest £22m.
Joining Lufthansa and its partners in the Star Alliance would also have bought Swiss time, but it may also have been the prelude to disappearing inside the German carrier's cavernous hangar altogether. Not an appealing thought for UBS and Credit Suisse, who were cajoled into putting national pride before profit and helping the Swiss cantons rescue the national airline.
Of course, all the major code sharing arrangements may in the end give way to mergers anyway. But that point still looks a long way off, as Air France, KLM and Alitalia are discovering. It is one thing for flag carriers to buy other flag carriers in a different part of the European Union. It is quite another to persuade a third country - the United States and Japan, say - to recognise that airline's right to land in New York or Tokyo.
Full and unfettered consolidation of Europe's airline industry will not happen until it is in a position to negotiate landing rights en masse with other trading blocs such as the US. The UK and the US spent 11 years of fruitless negotiation trying to reach a new bi-lateral agreement liberalising transatlantic air travel. If even Britain and the US cannot make it work, there's virtually no chance of it anytime soon with 15 EU member states to quarrel with as well.Reuse content