What on earth is going on in Britain's banks? It seems as though somebody has been going round the executive floors of the top London-based banks and lacing the water supply with a hallucinogen that causes petulance, unpredictability and sudden irresistible urges. "Look, I can fly", the men in pinstripes all seem to be saying. In the past two weeks, three of the top four British banks - Barclays, Lloyds and HSBC (all global institutions too, which each have a big presence in the Gulf) - have been convulsed by sudden changes at the highest levels of their executive structure.
All have been controversial but none more so than HSBC, which yesterday announced its long-serving chief executive Michael Geoghegan would leave the bank at the end of the year, having lost his bid to become chairman. It was a stunning development for a bank that has in the past appeared to manage the leadership succession effortlessly. But in light of what the rest of the London banking industry has been up to recently, maybe it was to be expected.
Barclays began the late-summer madness with the news, out of the blue, that John Varley was to depart as its chief executive. Mr Varley and his chairman, Marcus Agius, appeared to have steered the bank quite successfully through the financial crisis that began in 2008. The bank had declined a takeover by the UK government, with all the control strings attached, and opted instead for a short-term capital injection from Gulf institutions to tide it over the liquidity crisis.
That strategy worked, so why did Mr Varley suddenly feel the need to head for the door marked "exit" and hand over the job to Bob Diamond? That was the first evidence of contamination of the bankers' water supply. As the head of the hugely profitable Barclays Capital, Mr Diamond was responsible for the bulk of Barclays's profits, but he was also open to the charge of "casino capitalism" levelled at him by politicians as soon as his appointment was revealed.
It was an unnecessary red rag to a British government bullishly determined to radically overhaul its banking system after the disasters of last year. On the same day Mr Diamond's appointment was made public, it also emerged that Stephen Green, the chairman of HSBC, was to leave the bank to take up a job with the government, advising on the restructuring of the banking system. Mr Green's exit kicked off a fierce battle at the top floors of HSBC's global headquarters in Canary Wharf, east London, which for a time became a good old-fashioned boardroom farce, with toys being thrown out of the pram, lots of petulant stamping of feet and sharpened elbows used viciously in the race for the top job. His departure unleashed a seething mass of rivalries at "the world's local bank", which had previously been praised for its solidity and single-mindedness in the teeth of the financial crisis. (HSBC had also declined government aid and takeover.)
The schism in HSBC seems to have been a long papered-over divide between modernisers and traditionalists over the mechanism for succession to the chairmanship. Throw in the conspiratorial influence of a couple of former Goldman Sachs executives and you had the perfect recipe for boardroom mayhem. The decades-long tradition at HSBC was that the chief executive replaced the chairman in a seamless act of succession that would have meant Mr Geoghegan stepping up for the top job. But that approach has fallen foul of the corporate governance purists, whose hand has been hugely strengthened by the debacle of the financial crisis.
Instead, it was suggested HSBC bring in an outsider to placate the politically correct brigade and two former Goldman Sachs executives, John Thornton and Simon Robertson, pushed themselves into the frame. Mr Geoghegan's reaction was to threaten (privately) to quit if that happened, but he weakened his own position by withdrawing that threat as soon as it leaked into the public domain. He had obviously been drinking that contaminated water too.
The outcome was a huge shake-up at the top of HSBC. The finance director Douglas Flint, the compromise candidate among the warring factions, will become the chairman; Stuart Gulliver, the head of investment banking, will become the chief executive; and Mr Geoghegan will take the long walk. So now two of Britain's top banks, Barclays and HSBC, will have "casino bankers" as their chief executives. In the middle of all this carry on, Eric Daniels, the chief executive of Lloyds who masterminded the disastrous takeover of HBoS at the height of the crisis (on government orders), also decided it was time to go. He was paying the price for continued shareholder unhappiness at the way HBoS had infected the Lloyds business with "sub-prime disease".
You can almost guarantee the government-owned bank will not find a "casino" merchant as its next chief. Why has this convulsion happened in British banking at this time? Some experts explained it by pointing to the tough couple of years the senior executives have experienced since the crisis and the pressure they must have been under to keep their institutions above water. They are all burnt out, it is said.
Maybe. But contamination of the water supply is just as likely an explanation. email@example.com