Backroom boy Fisher moves up front

By Ian Fraser

Published: Sunday Herald

Date: December 20th, 2009

Profile of the week:
Mark Fisher, integration director at Lloyds Banking Group

Some are lucky to survive disasters, others seem to thrive on them. The year 2009 saw the rise and rise of Mark Fisher, financial plumber and one-time hatchet man to Sir Fred Goodwin. Having crawled from the wreckage of RBS’s catastrophic takeover of ABN Amro, this low-profile, publicity shy figure is tipped as a strong candidate to succeed 59-year-old Eric Daniels as chief executive at Lloyds Banking Group in 2010.

Mr Fisher has none of the recognition factor of disgraced former peers such as Andy Hornby and Sir Fred Goodwin and this may be his strength. He has been through the fire of the UK bank meltdown, without becoming a poster boy for excess and incompetence.

Mr Fisher, a 49-year-old “blustery Yorkshireman”, is more of a back office than a front office operator, someone who dirties his hands in the “engine rooms” of the banks for which he works. This has given him unparalleled knowledge and experience of the so-called “plumbing”, the bank infrastructure that services customers and, sometimes, pumps money around the economy.

He is seen as a superbly efficient “integrator” but also as a ruthless techno geek, with a history of creating massive economies for banks and -– through efficient use of IT and increasingly “offshoring” of functions to India -– massed sackings of low-level staff.

Just as RBS was disappearing beneath the waves, Fisher jumped at Eric Daniels’ behest to join Lloyds Banking Group as director of IT and operations on November 2008.

With UK taxpayers groaning under the weight of bank liabilities, he was the recipient of a £450,000 “golden hello”, in the shape of an option to acquire 984,251 Lloyds shares “for nil consideration to facilitate his recruitment”. The shares will vest in three years irrespective of his performance, as long as he remains with the bank.

According to a public-sector fat cats list published by the TaxPayers’ Alliance, which for the first time this year counted the part-nationalised banks in their tally of public sector pay, Mr Fisher took home £1.4 million in 2008/09, narrowly pipping Royal Mail boss Adam Crozier and besting Prime Minister Gordon Brown by more than £1.2m.

Most of these earnings represent part of his annual salary at RBS, where Mr Fisher was a board director from March 2006 until weeks after its near implosion and state-sponsored rescue. Befitting his backroom status, he is not a board member of Lloyds banking Group.

The remuneration in the TaxPayers’ Alliance survey included a £441,000 relocation allowance for moving to Amsterdam where Mr Fisher was, briefly, chairman of the management board of ABN Amro for which RBS, Fortis and Santander disastrously overpaid in October 2007. His task was to dismember the carcass of the Dutch bank and distribute its flesh among the consortium.

So how was it that someone who was present on the board of RBS at the time of its virtual collapse should be allowed anywhere near the boardroom of another bank? Other former RBS directors, including former head of global banking and markets Johnny Cameron and former chief executive Sir Fred Goodwin, have become radioactive and hard to employ.

However, Mr Fisher’s defenders point out that he still has a first-rate reputation as a bank integrator and, unlike the other two, was not directly responsible for woeful or reckless investment decisions. Ian Gordon, an analyst at Exane BNP Paribas, said: “Eric Daniels will enter his 60th year in August 2010 and, once share price recovery is underway, may elect to prepare his own departure. Fisher’s expert leadership of another successful integration programme further enhances his credentials as a worthy successor.”

Mr Fisher certainly won industry plaudits for the ruthlessness with which he implemented the integration of NatWest with RBS in 2000-02 and subsequently built up RBS’s group “manufacturing” function into a cost-saving powerhouse for the bank.

The unit, which employed 25,000 people, took over responsibility for the merged NatWest/RBS’s back office functions including IT, call centres, property, purchasing and printing. It meant the same systems and methodologies could be used across brands such as Virgin Money, RBS, NatWest, Direct Line, Lombard, Coutts & Co and Adam & Co.

Speaking to analysts five years ago, Mr Fisher said: “It’s one engine but we can make it look like many different things with a thin veneer on the front of it.” In 2005 he also oversaw the successful move from several sites around Edinburgh’s St Andrew Square to RBS’s £350m Gogarburn campus near the airport. One former director said: “He’s like a more human version of Fred the Shred. He implemented whatever Fred wanted with gusto. He’s a highly capable guy.”

After being turned down as successor of Sir Fred Goodwin at the helm of the seriously damaged RBS last October, Mr Fisher got a call from Mr Daniels who was desperate for a heavyweight banker with experience of complex bank integrations to take on the task of integrating Lloyds TSB and HBOS, which Lloyds had bought for some £7 billion in September 2008.

The Lloyds/HBOS integration is, if anything, more arduous and complex than that of RBS and NatWest. This is partly because it is being carried out in the full glare of publicity owing to sustained public, media and shareholder antipathy towards the Lloyds/HBOS deal. There are already signs the integration is not going as smoothly as that of NatWest and RBS.

There have, for example, been several U-turns, including the decision to “de-duplicate”, and then to sell, the Lloyds TSB branch network in Scotland (although this was difficult to foresee given it followed the intervention of EU competition commissioner Neelie Kroes). The decision to shut the Cheltenham & Gloucester’s branch network in England was also reversed, as was a decision to merge Insight Investments with SWIP when most of the former was sold to US-based BNY Mellon.

Unions are furious at the way job cuts are being “drip fed” and that some jobs are being transferred to India, in a continuation of Lloyds TSB’s pre-existing policy. Mark V Brown, assistant general secretary of Lloyds Trade Union, has estimated that 4,500 jobs have already been transferred. He said: “The simple fact is that the bank has abandoned its responsibilities to existing staff in the UK and to the wider UK economy, preferring instead to employ low-paid staff in India.”

However, the Yorkshireman, who declined to be interviewed for this article, seems unruffled. Working alongside a raft of consultancies including Accenture, Deloitte, Ernst & Young and IBM, he is still 100% focused on harmonising IT systems, shutting down call centres and rationalising back office functions. There is also the task of “de-duplicating” front office functions, including pruning the merged outfit’s massive branch network.

Overall Lloyds wants to cut annual costs by £1.5bn a year by 2011-– the equivalent of shaving 14% of its cost base. Analysts believe this will require up to 30,000 job losses across the group and already between 11,000 (if you believe the bank’s spin doctors) and 15,000 (if you believe the trade union Unite) jobs have been axed.

Bank insiders claim Fisher is ahead of targets on cost savings and point out he has already sold off unwanted subsidiaries including Insight, Halifax Estate Agencies, Bank of Scotland’s discretionary fund management activities to Rathbones and Employee Equity Solutions business to Computershare.

In Scotland the scope for carnage has been reduced, or at least delayed, following Ms Kroes’s insistence that the Lloyds TSB (formerly Trustee Savings Bank) branch network should be sold within four years. But the heat is on.

If Mr Fisher and his team of business and systems crunchers fail to deliver the targets, Lloyds’s shotgun wedding to HBOS will never stack up financially, shareholders will remain underwater and the UK taxpayer will be less likely to get a quick return on the money they have invested in the group. It will be hard. But by the time this happens, the quiet rise of Mark Fisher to the top table of UK banking may be complete.

FISHER FACTS

1981-2000 NatWest: Joined NatWest Bank as a graduate trainee in 1981 with a Maths degree from Warwick University. Rose to chief operating officer of the retail banking arm gaining extensive experience of ‘change management’ programmes. Alongside Sir David Rowland and Ron Sandler, he played a key part in leading the bank’s defense against hostile takeover approaches from Bank of Scotland and RBS in 1999-2000.

2000-09 RBS:  One of a handful of senior NatWest senior managers to obtain senior roles at RBS following its purchase of NatWest. As chief executive of the oddly-named manufacturing division, he was in charge of the bank’s infrastructure, property, IT, purchasing and back-office support functions. He became Fred Goodwin’s henchman, leading the integration of NatWest which caused 18,000 job losses. Promoted to the RBS board in March 2006 he was paid £2.36m in 2007. From November 2007 to March 2009 he was chairman of the management board of ABN Amro.

March 2009: Is made Lloyds Banking Group’s director of IT and operations, with responsibility for overseeing the integration of Lloyds TSB and HBOS, in November 2008. Fisher’s biggest challenges are to integrate the two banking groups’ IT systems, shed up to 30,000 employees and shave £1.5bn off the merged banks’ cost base by 2012. Salary unknown, although he did receive a £450,000 “Golden Hello” in the form of share options which vest in 2011.

• This article was first published in the Sunday Herald on Sunday, December 20th 2009. To read on the Herald Scotland website, click here

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