Spare a sympathetic thought, if you will, for the 15 non-executive directors of the Court of the Bank of England in 2007. They are there not for the money but for the burnishing of their CVs, curiosity, and perhaps a sense of public duty. Some are bankers, but none is a central banker. They’d struggle to explain the difference between Bankers Reserves and Short-term Repos, or why the totals should be roughly in step. They are all jolly busy with day jobs.

As this week’s minutes show in gruesome detail, when it comes to discussing the lack of racial diversity at the BoE, everyone has a view. When it comes to the technical consequences of rescuing Northern Rock, they have little to add. Actually, it’s worse than that. Their chairman, John Parker, reprimands them for leaking the appointment of a deputy governor (to the FT, natch) and implies that if they can’t keep quiet, they’ll be told even less.

Given this environment, it’s hardly surprising that the volumes covering the Great Banking Crisis portray Court members as flapping around like fish on a slab. Since even the technocrats were bewildered by the speed and novelty of the events unfolding before them – some had even interrupted their holidays to attend! –  it seems particularly unfair to savage the non-execs. The whole set-up was archaic, but it suited the executives to keep it that way.

As for those BoE technocrats, they would be less than human if, in the early days of the crisis, they had to suppress a shiver of shadenfreude. When in 1997 Gordon Brown had passed the setting of Bank Rate to the BoE, he followed up by taking back control of the gilts market, effectively blinding the BoE to its signals.

Much worse, in what was widely seen as a deliberate humiliation of Eddie George, then governor, he shunted the supervision  of banks to the nascent Financial Services Authority. As was obvious at the time, this strategic blunder not only gave the task to an organisation that had no idea how to do it, but robbed the BoE of the ability to detect early signs of individual bank stress.

With overall responsibility at one end of the Docklands Light Railway and individual responsibility at the other, something was bound to fall between the tracks. It turned out to be the British banking system.

Retail bond shocker

Few buyers of Enquest’s 5.5 per cent 2022 retail bond will have read the whole of the 144-page prospectus last February. Had they struggled through the legal bindweed they might have noticed that “the issuer’s business is materially affected by the prices obtainable for oil and gas. Any material decline in prices could have an adverse impact on the issuer’s performance and financial condition.”

Well they did, and it has. Enquest describes itself as the largest independent in the North Sea, and its shares have followed the oil price down. November saw a (fairly) reassuring trading statement, but in those far-off says, oil fetched over $80, and since then the jitters have spread to the retail bond, down from £100 in October to just £67 now.

The directors are piling into the shares, and one, Philip Nolan, is buying the retail bond. In theory it yields over 12 per cent to redemption. However, it’s also “unsubordinated and unsecured”, and swathes of the North Sea are unprofitable at today’s oil price. Do not expect the statement with the results in March to make happy reading.

Form an orderly queue

Land Securities is attempting to repay its debt to society by throwing open the top of its City monstrosity to the public. Well, not exactly throwing, since you can’t just turn up for the Sky Garden, no sirree. You have to book your leisure moment well in advance (nothing available until next month) with your name, rank and (email) number. Bring ID and if you miss your slot, well, tough. Oh, and do make sure you’ve read the terms and conditions to be allowed into this “public” space.

Of course the views are breathtaking, because the building curves away under your feet, and because the ghastly walkie-talkie isn’t in the way.

This is my FT article from Saturday

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