‘Relatively straightforward.’ Who could imagine ever hearing those words to
describe the first bank bail out in October of last year. But they come from
Richard Meddings, group FD at
Chartered Bank, and one of the key players in what became known as the
‘crisis cabinet’ that, over the course of seven days, formulated the first
bailout package for UK banks.
That package totalled £500bn of guarantees, loans and included the initial
£50bn investment in UK banks.
When announced on 8 October by Alistair Darling it seemed anything but
‘straightforward’, but even now six months on, with the immediate threat of
catastrophe gone, it is remarkable that Meddings is so composed about the whole
When asked what it was like, being at the turning point in an historic
crisis, his first thought is to recall that there were plenty of other people
there working on the same problem along with the Treasury, including his boss
and Standard Chartered CEO Peter Sands, colleagues Averina Snow and Macer
Gifford, plus trusted advisers and friends Robin Budenberg and David Soanes of
UBS. Meddings is nothing if not modest about his role. So in dealing with the
question he ends up being very brief.
‘Actually it was relatively straightforward. It was hard work, it was quite
He adds: ‘For us, it was very practical advice.’ Then: ‘I think it’s probably
far harder, far less calm for the politicians who have to stand up and drive
that through and then represent it.’
There is obviously a natural reserve about Meddings. Self-effacingly he even
reveals that his wife jokes that she thinks he’s Mother Theresa since it became
known he was involved the bail out. But there would be plenty crow about. Not
only was he at the heart of plans to rescue the UK’s main banks, but Standard
Chartered, while not completely immune from economic turmoil, has ridden the
storm reporting in March a jump in pre-tax profits of 13% to £3.2bn.
In conversation Meddings comes across as making a determined effort to keep
his feet planted firmly on the ground. He is serious, thoughtful and gives the
air that, though fully aware that the UK banking system was close to the abyss,
he was unruffled. But, despite his initial calm reserve, there is a willingness
to talk that suggests it plays on his mind more than he might care to let on.
He became group FD at Standard Chartered in 2006 after spells as group
executive director for growth and governance across Africa, the Middle East,
Pakistan, Europe and the Americas, and time as group executive director with
responsibility for risk, group special assets management and legal compliance.
Before that he was at Barclays as chief operating officer for private clients
and group financial controller. He was also group FD at the Woolwich. Meddings
qualified with ICAEW
while at Price Waterhouse in 1983.
Shock to the system
Whether any of that prepares you to save the banking system of an entire
country is anybody’s guess but Meddings and his CEO were among the first to act
on fears that the system needed urgent attention. And moreover to begin putting
a proposal together.
Meddings uses the analogy of a ‘defribulator’ used to ‘shock the system back’
to describe what they believed needed doing. Capital, funding and liquidity
needed to be sorted fast. For the whole system.
‘When we did get engaged with the government it was because actually we were
only a few days away from a potential collapse of the system.’ And by that
Meddings means a widespread run on the banks. He says: ‘Those were pretty
challenging, chilling times.’
What happened next was that Meddings and Sands sat down on Wednesday 1
October with colleagues to figure out how a rescue plan might work. The next
day they invited in government minister Shriti Vadera and the day after that
Standard Chartered wrote a plan and handed it over to government. That plan
formed the basis of the first rescue.
‘We explained what we thought the issues were and we brain-stormed the types
of thinking that we had, and compared and contrasted with what ideas we were
learning and basically mounted an argument that it was really urgent that we
moved fast on a multiple basis, all in one go.
‘And it had to be done very, very quickly… the risk was up so high that you
could have a real, sudden fall,’ says Meddings.
Despite all the criticism that has followed, Meddings only has praise for the
way ministers reacted at that time saying ‘that was really good executive
There is a hint from Meddings though that it wasn’t only the banking system
at stake. As simple as he might make the whole thing sound (‘it was actually,
what does a bank need…that was very practical’) it did edge towards becoming
When he describes the crisis as ‘chilling’ it is in the context of concern
for living with his family in the UK. But there’s something else that played a
part for Meddings as a professional banker trying to build a life raft for other
banks – reputation.
‘The big judgment was whether you could truly say…yes, we absolutely believe
it will work. In other words, if you follow this we will give you our
reputation, we think this will be enough, this will do it, this way of thinking
will be sufficient.’ This is presumably why Meddings stresses, more than once,
that there were many people involved in formulating and honing the rescue
package. Many people taking the same risk.
Reputation could also explain his reaction to the vilification of bankers in
the wake of the crisis. Our discussion takes place after all the attention on
Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, and his
pension. His house had just been attacked too.
Does Meddings feel embarrassed about being a banker? ‘No…there are two or
three ways to answer that. One, I’m the CFO of a very good bank providing an
excellent range of services to its customers, a bank that isn’t in any
difficulty, has got good momentum.
‘Secondly, I think there has been an over-victimisation of the bankers
generally. Yes, there has been some egregious behaviour, and much of it I think
attaching to…the investment banking models and organisation structures…but there
is that victimisation of bankers which I think has actually gone, in many ways,
too far, or is not discriminating enough about where the fault really lies.
‘Then, thirdly, a modern economy won’t run without a banking system and what
banks do is they leverage capital to provide credit capacity – they manage the
velocity of deposits… and the fundamental thing we do is provide a maturity
transfer. So, I can lend you money for 25 years through your mortgage in
exchange for other people who give me short-term money.
‘Modern economies wouldn’t work without that banking system, so I think it’s
a good business to be in. It’s an important business to be in for the good of
economies, for our society, frankly, to function, and I think we all need to
calm down. But, clearly recognising, and being deeply apologetic for, how it’s
gone wrong. But not simplifying the causes of how it’s gone wrong.’
The conversation ranges over regulation (‘regulators were looking in the
wrong direction’) and whether investment banking should be separated from retail
banking (‘I think the mistake is to think in terms of separating
organisations’), but it’s Meddings’ remarks that seem to reveal most about the
way he sees himself and his role.
‘It has become very pressured… it’s a hard factual, numbers-based role,
which… requires a strong work ethic. I think the role of a CFO is obviously soul
and conscience and worrier. There’s a high anxiety content and one of the
challenges of the job is always how to do that and not over-display it because
it’s a role where you have to exude confidence and decisiveness.
‘But at the same time I think the challenge is always to say what is the
horizon showing me, what is happening here and are my colleagues seeing that.
It’s a very interesting time to be in a bank, and CFO in a bank and, as I say,
it’s good to be with Standard Chartered.’
Why standard chartered didn’t go toxic
‘Much of those assets that exploded with high leverage were lightly
regulated, and with light capital requirements under them, were held in
wholesale banks and arguably traded between the financial institutions
‘That wasn’t a business that we had any material interest in. What they built
was off-strategy for us… what we constantly ask ourselves about is, does that
fit strategy? There are lots of things you might want to do, but fundamentally
does it fit strategy? If it doesn’t there’s a risk profile to it ie. the risk of
the unknown, the risk of lack of familiarity.’
Meddings adds: ‘You can get tempted. You can get offered more, we have
definitely been offered more to do, offered more things to buy. But our
resilience, our caution about straying off-strategy is much, much higher because
the world’s so much more dangerous.’
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