BHS and Thames Water do not appear to have much in common, but Martin Blaiklock, a scourge of utilities and their financing, can see some uncomfortable parallels. Studying their pension funds, or more accurately their deficits, he has found a growing hole in the accounts of Thames Water Utilities, the subsidiary that actually runs the water. The hole has been there for a decade, but it has grown from £38m in 2005 to £246m last year.

Unlike shopkeeping, water is not a labour-intensive business, and on his calculations, that sum is equivalent to £51,154 for each employee. [His comparable figures for BHS as a going concern are £111m and £10,900. The much-quoted £571m is the cost of paying an insurance company to assume the whole liability immediately].

There’s another common thread. The owners, both based in tax havens, have eviscerated the companies’ balance sheets. The dividends paid to Philip Green’s wife are now well documented. Thames Water’s various owners have taken nearly £3bn in dividends since 2006/07. The debt on the balance sheet has risen from £1.6bn to £10bn in a decade, equivalent to seven times the barely-changed equity. A whole new utility is needed to pay for the proposed super-sewer under the River Thames.

Thames Water has the sort of opaque, debt intensive financial structure that private equity owners prefer, and which bankers love for the fees the debt issues generate. Like all but three of the 10 privatised water companies, Thames is out of the gaze of the public markets. It is constrained only by the regulator and the market’s willingness to buy its debt at rising risk. As a result, there is little meaningful outside scrutiny of the business.

Thames’ monopoly means its employees are unlikely to need the Pension Protection Fund, now reeling from the double whammy of the failure of both Tata Steel and BHS. Its chief executive says he is confident it can cope with both if needs be, but the collapses highlight the fundemental  instability of a system which obliges a dwindling number of solvent schemes to pay up to help those which fail.

The PPF was, obviously, not designed to allow owners to slough off their obligations. BHS may provide a test of the limits, while the Pensions Regulator, who is supposed to oversee the health of the industry, might usefully enquire how Thames intends to bridge its troubled pensions water.

To be franc, it must be Swiss

Like most of us, you may never have seen a “Bin Laden” E500 note. They are likely to be even rarer in future, now the European Central Bank is to stop issuing them. In a fine example of euro-fudge, they will remain legal tender, a great comfort to savers who like to keep the odd million euros in a briefcase under the bed.

The boys at Bond Vigilantes  asked  readers whether the notes would now command a rarity premium or a hot money discount. A discount, of course, since the notes imply money laundering or worse. They may be a useful store of value, but they fail miserably as a medium of exchange, even before the ECB stops the presses.

For a real store of value, the Swiss 1000 franc note is peerless. Over the years it has become progressively more valuable as other currencies crumbled. It is also splendidly cheap funding for the government, since the notes are effectively unsecured, zero coupon irredeemable bonds. No wonder the Swiss have no intention of scrapping them.

Doing good, but is he doing well?

Nigel Wilson is not like other insurance company bosses. He rails against excessive executive pay. Rather than hand-wringing over the lack of houses, he plans to get Legal & General building them. He was one of the first CEOs in the life insurance business to understand the importance of cash flow.

Now, encouraged by another Wilson, Rob, who is apparently Minister for Civil Society, he is to chair a committee to discover how to grow “mission-led businesses”, defined as “profit-driven businesses that make a powerful commitment to social impact.” Well, best of luck with that, Nigel. Just don’t forget the day job. L&G shares are close to their lowest for two years.

This is a modified version of my Saturday FT column

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