Outlook: The Interbrew retirement that we can all drink a toast to

SFO for SFI?; Lloyds succession

The financial press will be glad to see the back of Hugo Powell and so too will the markets, judging by the spurt in Interbrew's share price which greeted news of his retirement as chief executive. He may brew some great beer, but he ran the Belgium-based company with a bull-headed determination bordering on arrogance. Interbrew's dogged pursuit of this newspaper and four other news organisations over leaked internal documents relating to an apparent bid for South African Breweries is but one example of the woeful misjudgement which came to characterise the Powell era.

The big miscalculation, of course, was his unconditional purchase of Bass Brewers in the UK on the mistaken assumption that the deal would be cleared by the competition authorities. It was not and shareholders have been drowning their sorrows ever since. The subsequent forced sale of the Bass UK business left Interbrew with an almighty hangover in the shape of a €1bn charge. Since then, Mr Powell's mission to become "the world's local brewer" has also led to him overpay for the German brewer Beck's as well.

The headlong pursuit of growth has done few favours for investors who are now paying for Mr Powell's terrible hubris with, if not quite nemesis, then very sore heads. Since the company floated two years ago its value has slipped by more than a third and it has underperformed the Belgian stock index by 20 per cent.

None of this, of course, could have been gleaned from reading the hagiographic press release which spluttered forth from Interbrew's Brussels HQ yesterday. Skim away the froth, however, and it is clear that Mr Powell has been helped into retirement. If Hugo had indeed done the tremendous job at Interbrew for which he was so profusely thanked, why has it felt the need to look outside for fresh blood to lead the company?

The new chief executive is John Brock, chief operating officer at Cadbury Schweppes, who presumably became available after failing to land the top job at the chocolate maker. His appointment marks an opportunity for Interbrew to re-assess its corporate culture. It needs to start rebuilding bridges with the press and credibility within the financial community.

Interbrew has abandoned its legal vendetta against newspapers in this country, but the damage could take some time to repair. In the meantime, Mr Brock might take a look at the size and composition of Interbrew's absurd board of directors, stuffed as it is with former prime ministers and obscure members of the Belgian nobility, who were party to the original decision to pursue legal action.

That would be worth raising a glass to, even if the Powell years are not.

SFO for SFI?

If things seem bad at Interbrew, then they look a great deal grimmer for the operator of the Slug and Lettuce pubs chain SFI. The business, Surrey Free Inns as was, has unravelled at an alarming speed since the group scrapped the dividend, warned on profits and announced that it had breached its banking covenants back in October.

The shares are now suspended at less than a tenth of their price at the start of the year and the chairman, Tony Hill, has been kicked out. SFI has owned up to overstating its assets and understating its liabilities and a slug has nibbled a £20m black hole in its accounts.

The latest instalment in the saga is the appointment of SFI's solicitors, Simmons & Simmons, to investigate how the slug got there and why its eating habits went unnoticed and undetected for quite so long.

The good news is that the banks have agreed to roll over SFI's financing facilities until June 2005 and provide the business with extra working capital to keep it going in the short-term.

But otherwise it looks ominous. SFI says the initial findings from its internal financial review are of "great concern to the board as they will be to shareholders". Ordinarily, investors rush for the door when confronted with that sort of statement. At SFI they cannot because they are reluctantly being made to enjoy a lock-in.

The lawyers have already been busy on what the company can and cannot say. Meanwhile, the shares remain suspended pending "conclusion and clarification" of its financial position.

It does not sound like the kind of slug infestation that can be treated with a pinch of salt.

Lloyds succession

Lloyds TSB has landed itself a new chief executive, a fly-fishing American with a passion for Japanese art by the name of Eric Daniels. But that transforming merger deal looks as elusive as ever.

Maarten van den Bergh, Lloyds' Dutch chairman, says he cast his net far and wide in search of a successor for Peter Elwood. In the end, he concluded that the best candidate was already working for him.

Mr Daniels, who joined Lloyds as head of retail banking a year ago, fits the image of the solid and reliable banker in almost every respect save for one. After 25 years with Citibank, rising to become chief executive of its Travelers Life and Annuity division, he suddenly chucked away his pension to go off and launch a dot.com, just as the bubble began to burst. The company, which planned to sell financial services to the unbanked Spanish speakers of Latin America, lasted just 18 months before closing down.

Chastened but glad of the "enormous learning experience" it gave him, Mr Daniels returned to the fold. In his relatively short time with Lloyds he is reckoned to have done a decent job in retail banking, getting all its staff and its huge network of branches pointing in the right direction. Unfortunately, the same cannot be said of the share price which has been beset by fears that a dividend cut may be needed to shore up the life arm Scottish Widows. The shares now stand at half their level of four years ago and Lloyds has underperformed its peer group by almost a quarter in the last 12 months.

After having been the best run and best performing UK bank for much of the last 20 years, Lloyds' star is on the wane. The march of the internet banks has cut into revenues and, faced with increased competition, Lloyds has found it necessary to tilt the balance away from shareholders and towards customers to keep the market share it has.

A transforming takeover deal might excite the City but where is it going to come from? Having been blocked from buying Abbey National, there is no further scope for UK expansion and, as Mr van den Bergh himself admits, most of its overseas rivals are too busy dealing with their own problems to contemplate a friendly merger with Lloyds.

So, Lloyds looks destined to keep on repeating the mantra that the rationale for a merger remains unchanged while failing to make much progress towards its goal. Unless something unexpected pops up, Mr Daniels' dalliance with the dot.com world looks like being his only burst of excitement for quite some time yet.

m.harrison@independent.co.uk