The City Diary: Antonio's smooth warning on risk

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The Independent Online

Much talk of how Antonio Horta-Osorio, the dishy Portuguese set to take charge of Lloyds Banking Group, might change the bank's culture once he's mounted the black horse.

One possible area he may examine is risk management, a topic on which he proved particularly smug last year when explaining to the Treasury Select Committee why his then employer, Santander, had enjoyed a decent financial crisis.

"We in Santander believe that you should have the risk management function totally separate from the commercial function," he purred. "In the case of [Santander], the risk management function does not ... report to the CEO, it reports directly to the chairman. It is important that you have that dichotomy between risk managers and business managers so you can come to the best decision. In the last resort, the risk manager should have the final word." This might prove a controversial concept inside Lloyds' HBOS arm. There, the last known head of risk who proffered an independent opinion to the top brass was Paul Moore. His reward? He got whacked.

Betfair shorted

As you might have guessed, I am concerned about the growth of Betfair, the online betting exchange of which I am a loyal customer. The company had a successful flotation last month, but with previous efforts to expand abroad producing mixed results – and its new LMAX trading platform marking the group's second effort to spin out its technology into the financial markets – I am yet to be convinced that the group is anything other than a utility play.

So, as the shares got off to a good run (and there's such a small free float) might they be worth shorting – on LMAX? Sadly, this proves impossible, as the exchange still hasn't gained regulatory clearance to trade individual shares. "We'd love to," starts LMAX boss Robin Osmond when I tell him my plan to place a bet against his parent company's stock, before modifying his approach. "We'd love to offer a market on Betfair shares," he says. Whatever. I've shorted with a spread better.

Boies beat – again

David Boies, Guy Hands's lawyer in his disastrous legal case against Citi, has had a mixed record in high-profile court battles. He famously beat up Microsoft in the long-running antitrust case in the late 1990s, before going on to defend Enron's Andy Fastow (now in the clink), music sharing website Napster (deceased) and Al Gore (remember him?) in his futile case following George Bush's 2000 US election victory (sic). I also note that in the Hands case, the judge dismissed a juror following complaints that she was involved in a documentary made by Michael Moore called Capitalism: A Love Story. Curiously, Boies represented Moore in an investigation by the US Treasury Department's Office of Foreign Assets Control related to his 2007 documentary, Sicko. What an amazing coincidence.