Telefonica's plan to offload O2 is a symptom of the Spanish retreat


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The idea that mobile phone operator O2 might be sold back to BT is a reminder that the corporate conquistadors of a few years back are firmly in retreat.

When Telefonica paid almost £18bn for BT’s former mobile arm in 2005, debt was cheap and Spanish companies were on the march.

Britain’s open economy meant they marched here. Many of the deals were aided by Spanish rules – later scrapped by order of the European Commission – that let acquirers write off the cost of goodwill from takeovers against their tax bills, enabling them to bid more than rivals.

But when the financial crisis broke, Spain was hit harder than most. Its weak domestic economy, signified by the construction sector downing tools and widespread youth unemployment, battered corporate earnings. The biggest firms were left with piles of debt to service and tough decisions over which assets they could afford to keep.

Telefonica has already stripped out emergency services network Airwave and O2 Ireland from the company it bought nine years ago. The discussion about leaving Britain is born of the fact that the telecoms market here is rapidly consolidating and if it can’t scale up, it may be better focusing on faster growing Latin American markets.

It has been a similar story at building giant Ferrovial, which snapped up airports operator BAA, only to sell stakes in the business to Chinese, Qatari and British funds, reducing its own holding to 25 per cent. At the same time, it raised cash by selling parts of the business: some, such as Gatwick and Stansted, because of competition rulings, others, such as property ventures and the World Duty Free chain, of its own volition.

Iberdrola, the energy giant which acquired ScottishPower, appears to be back on track. It sold assets across Europe to trim its debt, but last month began commercial operation of its offshore wind farm at West of Duddon Sands, off Cumbria, suggesting it is investing again.

Perversely, the company that had a front-row seat for the financial crisis, Santander, is the one on the firmest footing here. The bank which rolled up Abbey, Alliance & Leicester and Bradford & Bingley was forced at one stage to tell savers not to panic because their funding was separate from that of their Spanish parent. It drew comfort from the cash raised by listing minority stakes in several of its divisions.

As one of the banks that broke up ABN Amro with the Royal Bank of Scotland, life could have been very different if it hadn’t flipped its share of the spoils to someone else before the ink was dry on that catastrophic deal.

Does ethics role beckon for departing Santander boss?

Santander UK also has that rare thing: a chairman who weathered the storm of the financial crisis and will depart shortly with his reputation intact.

Lord (Terry) Burns, the former Treasury mandarin and a keen cyclist, was always due to pedal off about now, even before his chief executive, Ana Botin, was elevated to chair the group following the death of her father in September.

It hasn’t always been an easy berth. A £12.4m fine earlier this year from the Financial Conduct Authority for dispensing poor investment advice was a low point. Going back much further, I was at the tempestuous four-hour meeting for Abbey shareholders at Wembley 10 years ago when Burns, as chairman, eventually presided over the sale of the former building society to Santander.

Amid slow handclapping and a stage invasion, Burns used his proxy votes to quash demands for an adjournment from some of the 1,000 small investors who braved the pouring rain to be there. Proclaiming that he had been an Abbey customer since 1969 didn’t pass muster with the crowd who believed the board were just trying to enrich themselves by selling out.

Burns long ago regained his cool. He could be just the man to add some heft to the Banking Standards Review Council, the new body charged with promoting better ethics across banks and building societies in the UK. Fresh from media regulator Ofcom, Dame Colette Bowe has been appointed as chairman.

After regulators have crawled all over them, bank bosses would love to strike back by showing self-regulation has a role to play. It would be easy to dismiss as just another whitewash by an industry that has shown time and again it hasn’t changed. The template from which they can learn is the Hedge Fund Standards Board, which has made a decent fist of increasing transparency between hedge funds, their investors, regulators and governments under the chairmanship of Morgan Stanley alumnus Dame Amelia Fawcett.

High maintenance is fine when results match  

“High maintenance,” one headhunter described departing Thomas Cook boss Harriet Green to me. Surely high performance too, despite all the picking apart of her record now that she has gone. Green’s headlines obscured those that another female boss was due this week.

Investors that followed Vin Murria, who sold her firm Advanced Computer Software for £725m, have done rather well. Murria is just as hard-driving as Green, but carries on under the radar.

What is curious is her deep distrust of banks that goes back to her youth. Before she went to university, Murria spent a year battling with lenders on behalf of her father, who was in danger of losing his corner shop. And she gets up early – albeit an hour or so after Green.