Nice to be wrong. George Osborne has recruited Canadian Mark Carney as next governor of the Bank of England. That leaves Lombard snacking on his hat after bewailing predictions that Buggins, in the form of deputy governor Paul Tucker, was poised to take a turn. Instead, the chancellor has shown imagination by appointing a man who is an outsider to the bank and a foreigner to boot.

Mr Carney looked like a good candidate when his name was first mooted by the FT in April. Unlike Mr Tucker he has worked as a private sector banker, which should give him a better understanding of the breed.

He is credited with helping steer his country clear of the banking crisis, which Mr Tucker failed to do. And as chairman of the Financial Stability Board, the Canadian has an appreciation of the risks posed by shadow banking.

With interest rates jammed at 0.5 per cent, Mr Carney will have time to shake up the bank’s stuffy culture, which deters junior officials from speaking truth to power, while overseeing the assumption of new prudential powers.

We should not expect his remarks to be any less cryptic than Sir Merv’s, though. Mr Carney showed a Jesuitical talent for equivocation by downplaying rumours of his candidacy with the comment that he had not applied for the job.

Mr Tucker’s own news management skills were tested when Barclays, fined £290m for attempted manipulation of Libor, disclosed he had discussed the accuracy of its submissions with apparent casualness. He spun the revelation positively. But a taint remained, worsened by the publication of matey email exchanges with Bob Diamond, who Mr Tucker deemed “an absolute brick”. The disappointed official can probably now think of a rhyming epithet for the former Barclays boss.

Two-tier time bomb

Upsetting to storm out of a party only for the fun to continue without you. That appears to be the fate of Goldman Sachs, which dropped out of the syndicate of banks distributing the $2.1bn initial public offering of Megafon, Russia’s second-largest mobile phone company.

Goldman is understood to have had reservations about how transparent control of the business would be. So, for a while, did the UK Listings Authority, judging from the length of time it scrutinised the IPO. Pessimists doubted the deal, led by Morgan Stanley and Sberbank, would get done before Christmas. But it is scheduled to price on Tuesday.

What may have swung the UKLA in Megafon’s favour is that dominant shareholder Alisher Usmanov plans to keep that status. He is proceeding with the scheme believed to have worried Goldman – injecting his 50 per cent stake into an umbrella company jointly owned with two other businessmen. But aside from holding just 40 per cent of the equity of the holding group, USM, the duo has delegated voting on Megafon issues to Mr Usmanov through a shareholder agreement.

It is moot to ask how robustly that clarifies control. Shareholder agreements can be unpicked. But it is worth remembering that Megafon is only listing global depositary receipts in the UK. Offerings of these securities are targeted at sophisticated emerging market investors and are thus regulated less heavily than sales of ordinary shares.

London has attracted about £25bn in Russian listings since 2002, according to PwC, partly reflecting the hassle-free character of GDRs.

UKLA has a tricky job in keeping up standards without deterring too many issuers. A two-tier system is not a bad solution. But scrutiny of GDR issuers is rising, as controversy over Megafon has illustrated. Tensions between the economic and regulatory missions of City regulators will become harder to reconcile.

Shower-proof posse

Internal auditors would have suffered a bigger reputational blow from the £29.7m fine sustained by UBS if more people knew who they were. There is little visibility to checking whether staff of big organisations are obeying the boss’s orders.

At UBS London, internal auditors, who have a penchant for wearing anoraks over their business suits, should have represented an independent line of defence against fraudster Kweku Adoboli, as an FSA notice explains. The office had already suffered an £8m fine for rule breaches in 2009. Instead, internal auditors decided that sloppy practices which later transpired to have helped Adoboli in his deceptions were, with one exception, not worth signalling to the board.

Separately, the FSA has asked internal auditing bodies to review whether members working in banking have the skills and authority they need. The Adoboli case suggests that they do not.

Get alerts on European companies when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article