RON Sandler, the man given the task of shaking up Britain’s long-term savings industry by Chancellor Gordon Brown, says he owes a huge debt of gratitude to Sir George Mathewson, chairman of the Royal Bank of Scotland.
Mathewson, along with his then RBS colleagues Lord Younger and Fred Goodwin, managed to persuade NatWest shareholders to accept a £21 billion takeover offer from RBS three years ago, rather than allow a team led by Sandler and chairman Sir David Rowland the chance to lead an internal turnaround of the ailing bank.
Sandler said: “If I had any nightmares in the whole [takeover] process, it was waking up in the early hours of the morning thinking, gosh we might just win this, and I’m going to have to run this bank for the next 10 years. I do say that in a very flippant way, however.”
The 51-year-old Sandler, who was in Edinburgh last week to persuade Scotland’s financial services community of the logic of his proposals for the long-term savings market, added: “Most would feel the right result [an RBS victory] was achieved at the end. Certainly I had lunch with George [Mathewson] today and he feels that is the case, and who am I to disagree with him?”
Ron Sandler became chief operating officer of NatWest in October 1999 after receiving a phone call “out of the blue” from its chairman, Rowland.
The pair had worked closely at Lloyds of London in the mid-1990s where Rowland had been chairman and Sandler chief executive. NatWest was under siege following an initial hostile bid from the Bank of Scotland and Rowland was desperately seeking a successor to the hapless former CEO Derek Wanless. Rowland believed it would be impossible to mount a credible defence without someone of Ron Sandler’s turnaround skills alongside him.
Sandler seems delighted to be able to reminisce about an extraordinary six months during which he bore the brunt of personal attacks from spin doctors and protagonists in a fiercely fought three-way battle. For serving as NatWes CEO for six months from October 1999 to March 2000, he reportedly earned £700,000.
But did Ron Sandler and his defence team ever realistically believe that NatWest, bloated and mismanaged as it was, would be able to survive as an independent bank?
Ron Sandler said: “It’s in the best interests of your shareholders that you put up the strongest fight you can if for no other reason than it causes the price to go up and forces the bidders to think hard about their respective positionings.”
Given the vitriol that was being spilled at the time, one would expect relations between Sandler and his opponents during the takeover battle —Bank of Scotland’s Sir Peter Burt and Gavin Masterton, as well as RBS’s Mathewson — to be frosty. However, it seems that auld enmities do not run deep, and may anyway have been more posturing than real.
Sandler said: “I just had lunch with George [Mathewson] It was all good knockabout stuff. There were all sorts of meetings before RBS came in [it tabled a counter bid on 29 November 1999]. George Younger, George Mathewson and David and I met on a fairly regular basis to see whether or not an agreed bid could be possible. In the event it wasn’t.”
Was this due to any inability to agree on how the top jobs should be carved up?
Ron Sandler seems poised to speak — then stops himself.
He says: “Those reasons should remain quite properly private.” He adds: “I’ve always been impressed with both the Georges and indeed with Fred, as indeed I was hugely impressed by both Peter Burt and Gavin Masterton.
“And we had lively meetings, mainly private, behind-the-scenes sort of meetings in the main we would meet without advisers, but there was a lot of other contact at different levels. It was thrilling.
“All the NatWest shareholders that I still see from time to time profess themselves very happy with the way the defence was conducted and the ultimate outcome. It was an interesting and lively period and one I look back on as good exciting times.”
However Ron Sandler says he was disappointed by aspects of the process not least the “mindboggling fees paid to investment bankers”.
“I was also disappointed by the extent to which much of the debate was conducted through the press — which means it tended to get reduced to soundbites. It’s a very superficial and sometimes personalised and emotional level of debate but I feel that takes away from the substance of what is really going on.
“The other thing is the institutional shareholders do not really want to engage in the process until the very end — the last few days. Most don’t actually want to meet on any regular basis with management which means that for the first however many months, the debate is conducted through the press, which means it unfocused and a bit off centre.
“One is then confronted with a 10-day blitz around City institutions, where everything is condensed into half-hour chunks, and where it’s impossible to get any meaningful dialogue.”
Despite some fund managers claims that NatWest didn’t have a chance of surviving as an independent plc, Ron Sandler says: “Right up until the very end it was a very close run thing. The day before it finally went RBS’s way when Schroders and the Pru, I think it was, came down on the side of Royal Bank, it genuinely was too close to call, in our judgement.
Had NatWest’s defence been successful, Ron Sandler admits that he would not have relished the prospect of seeking to turnaround the beleaguered institution over a period of three to five years. He prefers shorter-term challenges with steeper learning curves.
Brought up in Rhodesia (now Zimbabwe), Ron Sandler started his career in management consultancy, working for Boston Consulting Group in Los Angeles and Wendy Alexander’s alma mater, Booz-Allen & Hamilton in London. He also led two leading City moneybroking firms in the early 1990s, Quadrex and Exco.
From 1995 to 1999, he made his name as chief executive of Lloyds of London where he played a critical role in bringing the global insurance market back from the brink of collapse.
He said: “I see careers as an adventure. I get bored with things after a while. I’m not someone who thinks in terms of putting down roots and spending 10, 20 or 30 years in one place. I find it invigorating to be presented with something fresh where I have to learn anew about a business.
“I like the process of coming into a situation and finding it all very confusing initially and then over a period of months feeling that the mists are parting.
“The first 12 years of my career were spent as a management consultant, which meant I was continually being thrust into strange situations where you are not always welcomed. You have to learn to absorb information very rapidly occasionally to appear more knowledgeable than you actually are . You have to build credibility. You have to learn to look at something, form a coherent view of it, understand the ramifications of that view and then present in ways that will bring behavioural change.
“I like the idea of stepping into something very strange.
“Some people like to go on holiday to the same location time after time — because they know the landscape it’s more relaxing. I would tend to seek out new environments because I find that more rewarding.”
One consistency in his life, however, is his passion for rugby and the Blues. He still plays guitar as well as the banjo. His favoured musicians include Amos Garrett and Stevie Ray Vaughan. “They’re who I look up to, and wish I could emulate.”
Ron Sandler on…
WHY ROYAL BANK DESERVED TO GET NATWEST
“Most would feel the right result [an RBS victory] was achieved at the end. Certainly I just had lunch with George [Mathewson] and he certainly feels that is the case … and who am I to disagree with him?”
TACKLING LLOYDS OF LONDON
“I was young and naive enough to think it’d be quite an exciting situation in which to play a part. You win or lose in those situations — there’s no middle ground.”
HIS SAVINGS PROPOSALS
“Many people are disenfranchised from savings. The only way to bring them in is to re-engineer the economics. The best way of doing that is to create this narrow product set which is regulated. The extreme elements of toxicity are regulated out and it’s then delivered through a substantially deregulated sales process.”
PRICE CAPS
“In an industry where the consumer doesn’t even know what prices mean, you can’t rely on market forces and there has to be a price cap. By and large the industry accepts that.”
IFAs
“If as a customer I discover an ‘adviser’ is being paid by the product provider on the basis of how much of their product he shifts, I think that carries the seeds for an erosion of trust.”
Copyright 2003 SMG Sunday Newspapers Ltd.
This article was published in the Sunday Herald on 11 May 2003