Lord Cairns awarded top job at BAT

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The Independent Online

Financial Editor

Lord Cairns is to be the new chairman of BAT, less than four months after he resigned amid confusion as chief executive of SG Warburg, the investment bank.

BAT, the tobacco and financial services giant, said Lord Cairns, 55, had been made vice-chairman and would become non-executive chairman on 1 January 1996 when Sir Patrick Sheehy retires.

Lord Cairns has been a non-executive director of BAT for the past five years.

BAT was at pains yesterday to stress that the undistinguished nature of Lord Cairns' departure from Warburg, as the City's premier investment bank lurched from crisis to crisis, haemorrhaging key staff, had little bearing on his new role. "Whatever may have happened at Warburg, there is no reason Lord Cairns should not make an excellent non-executive chairman at BAT. It is a very different role," said Michael Prideaux, the company spokesman.

BAT stock gained six points to 507.5p after the announcement, with shares also benefiting from gains among composite insurers. The company said it hoped institutional shareholders would see Lord Cairns as a safe pair of hands.

Martin Broughton will continue as group chief executive and deputy chairman of BAT. "We are not looking for any change of strategy. Sir Patrick's retirement was well-flagged and prepared, and they have found someone in Lord Cairns who knows BAT well," said Nyren Scott-Malden, analyst at BZW.

The BAT appointment marks a remarkable transformation of Lord Cairns' fortunes, which had been languishing under the heavy cloud of Warburg's downfall. By resigning in February, Lord Cairns had the final prize of the chairmanship of Warburg snatched from his grasp months before he was due to take it up.

Visibly wracked with emotion, he took responsibility for the dismal failure of Warburg's planned merger with Morgan Stanley at the end of last year. Warburg never recovered from that blow, and last month it sold itself to Swiss Bank Corporation.

Within Warburg, demoralised staff put a key portion of the blame for the drift and confusion that had characterised the investment bank in its latter months on the shoulders of Lord Cairns.

"The BAT board, after careful consideration, felt Lord Cairns is the right type to be a very good chairman," said Mr Prideaux. Analysts said his expertise would be important for a group that increasingly saw its future in retail financial services. Already the owner of Eagle Star and Allied Dunbar, BAT is said to be considering another move in UK financial services.

As non-executive chairman, he is expected to earn about pounds 190,000 at BAT compared with the near-pounds 1m he was paid at Warburg. BAT said Lord Cairns, in his non-executive role, would not qualify for performance-related pay, share options or pension contributions.