The finance director and diversification

I've been looking at the role of the finance director in diversification. Interesting to find that the FD has a critical role to play.

Much will depend on the position of the FD in relation to board decisions, but there is quite an involved role in putting together a structured view of diversification opportunities. This is, of course, where the finance chief becomes a real strategic player. This isn't the run of the mill compliance and reporting role.

I spoke to consultants and a former FD about how to organise your diversification approach. Carefully, seems to be the order of the day. Don't rush into anything. There's room for putting together tonnes of empirical research. This should be useful whether you're a big international player or an SME seeking new business opportunities.

But as finance chief this is where you make a difference to the business model and the future growth of a company. It's not easy though and there is still room for a big judgement call at the end of the day. How big the judgement is will depend on the preparation you do in advance (the empirical stuff), your experience and your intuition. But this element of the decision making is really where the finance director enters the realm of being a strategic player. Diversification is a key route to growth in the current economic circumstances which means, in turn, that the strategic skills for an FD are also at a premium.

Anyway, here's the article at Financial Director magazine. (Click here). And come back to let know what you think.

Barclays and its new finance director

It’s reported this morning that the new chairman of Barclays is to lunch a clear out of the board in a bid to get some fresh blood and fresh thinking at the top of what has become, perhaps, Britain’s new most notorious bank (the people at RBS must be relieved someone else is taking the flack).
The FT says its possible this round of recruitment could include a replacement for FD Chris Lucas, who has been unwell for a while and is due to retire next year in any case.

But who would want the job? Who would want to take the FD’s chair in what has been a calamitous time.
Timid men and women will steer clear. In fact they’ll run a mile. But for a hardy soul, a dynamic individual with balls and brains, this is a plumb job. And there is a model for this - Bruce Van Saun, the American who took over as the finance chief at RBS once the old guard had been cleared out. I interviewed him for Financial Director and this is the first thing I quoted: “I don’t think I’d be attracted to something that was a maintenance job, where it’s clipping coupons or without a lot of change agenda associated with it.”
Change? That was understating it slightly given the monumental deleveraging that’s been taking place at RBS and the further controversy it encountered (remember the bonuses ferago?).
CEO Stephen Hester apparently told Van Saun that RBS was the biggest turnaround job on the planet. He wasn’t kidding. But Barclays must have saddled itself with one some of the worst self-inflicted reputational damage, ever, after being found out in the Libor scandal. Which makes sorting out it’s mission and business model just as big a piece of work as RBS.

Barclays provides an interesting opportunity. Not just because it’s a big bank so will look good on the CV, or that it’s bound to be well paid (though care needed here that the cheques don’t look gratuitous). No, Barclays provides an interesting source of motivation, something I think I detected in Van Saun. It’s not just about doing your job well, earning the big bucks (he could have earned more elsewhere, I suspect) it’s about doing “good”. You can come at the Barclays role at least partially, if not wholly, spurred on by the belief that you could be part of fixing something in the public interest. Yep, that’s right, the public interest. For us, you, me and the rest of us, who rely upon financial institutions staying in one piece, having robust balance sheets, sensible business models and right-minded ambitions.
I know, I know, it should be about the shareholders, and their value, but I don’t think that’s the place where these large institutions are anymore. Barclays had a cultural issue. An environment in which people lost sight of what was honest and ethical. It’s that which needs rebuilding.
Sad to say it, we need financial institutions like Barclays. A fresh team at the bank could build a new organisation constructed on ethics and working practices that have integrity and a business model that embodies those values. 
If I think anything has changed in the past few years its that the public’s expectations of businesses has transformed. They want systemic stability, they demand integrity and businesses that are honest. Bankers are o loner the master of the universe. They nearly sunk us. A new Barclays FD would carry the burden of helping mend all that. This cries out not just for technical ability. Technicians need not apply. No, this needs that indefinable thing - leadership. Gravitas, authority, guts, strength of character, intelligence, unparalleled communication skills - all those things, plus a little bit more. For the right man or woman it will be a battle, but a glorious one.

To read the Bruce Van Saun interview click here.

Audit and the Competition Commission

Fascinating this week that the Competition Commission should reveal that its examination of the audit market has been delayed and we won't see a report emerge until January of next year. That's potentially another three months. And that's if it's sorted by then.
Naturally the speculating has begun about why this should be the case. One line of thought in the City is that the Competition Commission could be short of evidence of anything and needs more time to grub around. The other line is that it has a lot of evidence, bags of it, is attempting to make sense of it all and is currently being submitted to a heavy lobbying campaigns in the hope of swaying its opinion.
In the meantime the European Commission intends to push ahead with its own reform regardless of where the Competition Commission is. Could be convenient for CC if the EC gets there first to do all the heavy lifting. Certainly take some of the heat off.

And the record is...$104m.

I'm coming to this story late, I know, but here it is anyway. I'm researching a piece on whistleblowing for a magazine. Specifically I'm looking at the differences in approach between here and the US. The main difference I've found is that in the US whistleblowing can potentially turn you into a multi multi millionaire.
Bradley Birkenfeld earned himself a payout of $104m after spilling the inside story about tax evasion schemes at UBS. Yes that's right -$104m!
Some how this passed me by when the news emerged not too long ago (shame on me for not keeping up with the news).
Is it any wonder that the US perhaps sees a higher rate of whistleblowing than we do here in the UK? That's something to blow a whistle for.
Anyway, sorry if this isn't news to you but it impressed me.

Irish lay into international accounting standards

Astonishing article in the Irish Times today involving an attack on international standards. The City is already abuzz with speculation that it may be doing real damage to the reputation of IFRS. See what you think. Read it here...Questions over auditing profession's role in the crisis.
The article furthers the ongoing debate of whether auditors should have been paying attention to IFRS or Irish law,and its emphasis on a "true and fair view," when they were auditing banks. This argument won't go away and the Irish press has certainly got excited about it.